If buying property through superannuation was ever part of your long-term plan, that may no longer be possible.
That’s because the federal government has changed the rules for self-managed super funds (SMSFs).
While SMSFs can still buy residential property using existing super balances, they can no longer borrow to purchase residential property. Borrowing to buy commercial property through an SMSF is still allowed.
The government said the change will help protect Australians from taking on unnecessary risk with their retirement savings.
Critics, however, argue it removes one pathway that some investors have successfully used to build long-term wealth.
One strategy changes, others remain
While this particular option has been removed, Australians can still build wealth in many different ways, including:
- Investing in residential property outside super.
- Investing in commercial property through an SMSF (subject to the rules).
- Contributing more to super.
- Building a diversified portfolio of shares or managed investments.
- Paying down debt and building equity over time.
Different strategies suit different goals, timeframes and financial circumstances.
Contact the Grimsey Lending Team if you’d like to explore your property finance options or understand how the new SMSF rules may affect future borrowing plans.