Super funded investment property purchase is a term that has been heard by almost all of us. But, only few of us know well that they can actually structure these purchases in some different ways. One can easily choose the best structure to suit the circumstances to help reflecting the financial goals and resources as well.
Tips to know about super funded property purchasing
So, before you purchase residences within your fixed budget price in 8 st thomas, Singapore, you need to know about these following tips to help you out.
* Direct purchase: If your SMSF can fund 100% of all associated cost of the property purchasing process, then you can consider a direct purchase for you. In this process, there will be no loans and also there will be no gearing. The required outlay will be much higher than the other purchase methods.
However, this process can limit the number, range, along with types of properties you want to purchase as well. In short, it can be considered that adapting this process can result in increasing savings as it helps minimising the transaction and purchase costs.
* Installment Warrant: A maximum number of buyers choose installment warrant plan. It means that the title of the property is own by a bare trust with SMSF on the time of obtaining a recourse plan that is limited. This SMSF is responsible for the for the expenses that include loan repaymentto the lender and also it receives all the rental income of that specific property.
If the trust is properly set up, then the time, loan is fully paid, the title gets transferred to the SMSF without any capital gain of tax or stamp duty. Technically, it can be considered that this process acquires the assets via a series of installment payments.
* Tenants in common: SMSF can own a fixed percentage in the property along with the other parties who are already owning the remaining percentage of the same property. Usually, investors can share the costs, expenses and also the income accordingly.
* Joint venture: The time, the owner undertakes a joint venture, he or she gets a formal agreement in order to pursue a commercial project and to share the return from the venture as well. There is an option for the SMSF and that allows the owner to enter into a joint venture with a family trust to purchase a block land and then they can build a house on that particular land.
After the building construction is completed, the title over the property will be transfered to the joint venture partners based on their initial input. This process allows SMSFs to be involved into this property development process without carrying on the buisness of this property development in a formal way and this is one of the advantages of this entire process.
The outcome must be shared by the joint venture partners like the rental income from the property rather than proceeding to the completed development. However, this process is complex to undertake, professional advice is crucial to be obtained before making any commitment related to the process.