We want to use our Super to purchase Land and we don't have enough in Super, can we use what we have for a deposit?

Hi Nathan,

Firstly you would need to have a self managed super fund to purchase property.
A couple of questions for you.
- is your super in a smsf already?
- once you pay the deposit what next?
- how will you settle the purchase?
- if you borrow in the smsf where are the funds to make interest payments coming from with no rent coming in?
Sorry for all the questions but there is not enough information here to provide a good answer to you.

Hi Nathan,

You'd want to have a chat to your accountant about the suitability of purchasing land via an SMSF. I'm almost certain that a Land purchase is not suitable within SMSF.

There's a limited number of lenders who will finance SMSF loans, each with a different set of rules.

Happy to discuss your options with you.

All the best,
Gerry

You can borrow in a Super Find to make up the difference but it will depend on the use of the land whether you can actually purchase the land in a SMSF. Ifi it is a large acreage or rural property there may be restrictions on the loan to value ratio. Please call if you require further information or for a referral to a Financial Planner.

Nathan. Hi. You have raised an interesting question. I will make an upfront assumption that you are already operating a self managed super fund.
Any asset purchased by the fund must be at arms length from yourself as an individual and you are not allowed to derive a direct personal benefit from the asset (ie it must be a pure investment).
As a guide, a classic motor car could be deemed a suitable investment, however if it is garaged at your own home then you are deemed to be receiving a benefit and this would be a breach of the rules.
A further example would be a piece of artwork that is hanging in your own home.
For the land purchase that you are thinking of, it would need to be 100% owned by the fund. If you were to have any personal ownership then you would most likely be in breach of the superannuation rules for investments.
From a lending perspective, loans to SMSF for property purchases are normally restricted to house and land. I am not aware of any lender that will lend for vacant land or even a construction package.
If you are looking at getting exposure to property with smaller amounts of money, then the purchase of units in a managed property fund could be a suitable investment.
I recommend you speak with an Accountant experienced in running SMSF's for further advice.
Regards
Ken Olds
Mortgage Broker
1300 ASK KEN

No. Regards Ariel