HOME > BLOG > Home Loan Advice > What is a Self-Managed Super Fund?

One reason why many people have a SMSF set up is so they can invest in direct property. It’s something they understand, and they feel it would be a good way to create wealth for their retirement. A SMSF allows you to manage your money, but there is a lot of responsibility if it's used for investing.

It is a special kind of a trust

We might say that you need to place a lot of trust in yourself if you have a SMSF set up, and that would be true. But here what we are talking about is a legal structure. It’s in the form of a trust. A trustee owns the investments and manages them for the benefit of the people who have been identified. This is done according to a set of rules that comply with Australian law.

The trustee is either the members of the fund or a corporate body.

It is self-managed

As the name describes, this fund is managed by you. That places a lot of responsibility on you for making investment decisions and operating the fund according to current law. Typically you will work very closely with your financial advisor or accountant to help ensure you are doing it all correctly. You will not be able to “pass the buck” with regard to the activity of the fund by saying you didn’t know what to do, or your accountant did it for you. You are expected to know what you can and cannot do and operate the Self-Managed Super Fund accordingly.

It is a superannuation fund

The laws that apply to superannuation in general within Australia also apply to SMSFs. That includes provision for tax deductible contributions, concessional tax rates and even tax free distributions in retirement. Such concessions are likely to change as governments search for more tax dollars, but we would expect such changes to apply to both ordinary super funds and Self-Managed Super Funds.

SMSF property and other amazing things

One reason why many people have a SMSF set up is so they can invest in direct property. It’s something they understand, and they feel it would be a good way to create wealth for their retirement. While historically super funds have been highly restricted when it comes to borrowing money, that has now eased for some investments, including investment property. A SMSF loan needs to involve a property set up in a separate bare trust within the super fund and there are likely to be limitations on the Loan to Value Ratio (how much your SMSF trustee can borrow against the property) but it does open up a whole new world of possibility.

Free SMSF Borrowing eBook

Get a copy of our free eBook, SMSF Borrowing for more information on what Self-Managed Super Funds are, whom they may suit and how to invest in property through one. Detailed information is provided on SMSF loans for funding the purchase of an investment property, as well as specifics on how they must be set up. A SMSF loan is different than a typical mortgage or home loan, and even the structure within the fund doing the borrowing is unique.

An important note about advice

