Self Managed Superannuation Funds and Investing can be overwhelming and complex. Please refer to our FAQ to gain further understanding or reach out to our financial team to assist further
Self Managed Super Funds
What are the risks of having a self managed superannuation fund?
The first major risk is non compliance and mismanagement. So, if you use your self managed super fund property for purposes other than what it’s designed to be used for, which is solely to invest and to create funds with which you can live on after you finished working, then that can be met with things like fines, you can be disqualified or you can have your fund entirely closed by the ATO or by ASIC, whichever body is governing the rules in which you’ve breached. Other risks to a self managed superannuation fund is they are predominantly used for the purchase of Australian residential properties or Australian properties entirely like commercial and residential.
However the customers that we assist are primarily residential property purchases, the biggest risk is having a loan inside your self managed superannuation fund which is reliant on rent from your tenant and contributions from your employer to be able to repay that loan. If you lost both of those things in an uninsured fashion, then of course you would have outgoings to the fund, but no incomings to be able to match it. So if you were unable to liquidate or sell your assets, i.e. your property, then unfortunately, you would be left in a position where that would then be received by the bank because you would be in default of the repayments.
Does having an SMSF have lots of ongoing costs?
Firstly the SMSF itself does have some ongoing costs, like a registration fee to ASIC (Australian Securities and Investments Commission) so you are able to register your business that is the Superfund. Also you do have an accounting and auditing cost which you must do at least once per year, and then submit your tax returns to the ATO. Outside of that the costs are then variable, you can choose to engage a financial planner or a financial advisor, with whom, unlike ourselves here at Corbwood & Associates may charge a high fee. You could also decide to take onboard investments such as a property that would then of course have buildings insurance, Council and water rates which are usually considered as a portion of the rent being the income that you are receiving from the property. We have gross rent, then minus those costs will create your net rental income to the fund.
What happens when I want to sell the house I own through my self managed superannuation fund?
This would be the same as a traditional property sale. You would list it to purchase through a licenced agent. It would then be sold and the funds would then be dispersed from the conveyancer or solicitor, completing the purchase back to your self managed superannuation fund. If that is prior to retirement age, you would be liable for a 10% capital gains tax. However, if you do that, after the age of 60, or when you retire, then there would be no tax liability to that sale. The funds would remain in your self managed superannuation fund until you exercise your retirement at the earliest available age to do so. And from there you would be able to use those funds from the purchase for personal gain.
Who rents, manages and maintains the property for us?
Whilst there is no obligation for you to do so, here at Corbwood & Associates we are directly aligned with one of Australia’s largest and best property management partners with whom would rent, manage and maintain that property on your behalf. You would be regularly updated on inspections of the property in regards to its maintenance and ensuring that your rental income is dispersed to you consistently and at appropriate frequencies to be able to cover all or most of the outgoings of your property.
How much do Corbwood & Associates charge?
We do not charge our customers one single cent for our services. 100% of the income generated by Corbwood & Associates comes from the partners that we work with and introduce you to. Mostly that is centred around mortgages being offered to our clients by the lending partners that we are affiliated with, insurances to be able to offer cover for you as the landlord on the property that you purchase. And also, commissions from the exchange of property titles and acting as a real estate agent on your behalf.
How do I do my taxes and audits at the end of every financial year?
This can be done by your existing accountant if you have one. Alternatively, again Corbwood & Associates is a network of professionals with which you would be able to assist you with every single one of your tax and auditing matters. Our exclusive partner Crescent Accounts would be able to assist you at the end of each and every financial year.
What happens to the insurances I have inside my super at the moment?
Upon establishing a self managed superannuation fund, we will not close your retail super fund, we will simply reduce its balance down to the minimum required amount to maintain your current insured position. It has been proven that usually you will find a more comprehensive and cost effective cover is offered inside a retail superannuation environment rather than inside the self managed superannuation environment. Due to the ability to access wholesale, not retail insurance policies.
What happens when we retire?
When you retire you have the option of continuing to receive the rent from your property as your pension based income or alternatively liquidate the property by selling it and if there is any debt remaining on the property, pay it and have all remaining funds at your disposal to fuel the lifestyle that you’ve always dreamt of in retirement.