borrowing into smsf's, page-3

Hi WM

Correct - SMSF can borrow to buy property etc. The practical application is essentially the same as a normal loan but it needs to be carefully implemented to satisfy compliance requirements (this is easily done if you deal with someone who knows what they are doing)

Some of the key benefits (generalised) are:
- use of pre-tax dollars to pay off debt (this can save 10's of thousands in tax depending on personal marginal tax rates and ability to make deductible contributions to super)
- able to rollover retail monies to provide for the deposit / instalment
- minimal / no future cgt depending on age
- ideal for small business - ie buy rather than rent
- possible of potential pension / rent 'roundabout'

Things to be mindful of:
- if it's a bad investment, gearing will only exacerbate it
- you need sufficient ongoing liquidity to sustain the repayments: this can be a combination of rental income, contributions and other smsf earnings

Subject to your circumstances you can finance the loan yourself thereby doing away with the bank altogether (that'll save 2-3k before you even start)

As a rough guid, it can be easily done including bank costs of about 6k (small price relative to tax / other savings)

Cheers

MK