OVERVIEW
The Equiti Warrant Trust is an innovative financial structure developed to facilitate a Self Managed Superannuation Fund (SMSF) borrowing to invest in direct residential or commercial property.
As a general rule, superannuation funds are restricted from borrowing to acquire direct property assets.
Recent amendments to section 67 (4A) of The Superannuation Industry
(Supervision) Act 1993 ("the SIS") now provides those that
have a SMSF with an exception to this general rule.
Whilst there are many important considerations and certain restrictions that will need to be highlighted, the Equiti Warrant Trust essentially means that:
your SMSF can now borrow money to invest in tax effective property!
This is an effective way for an individual that has a positive
long-term view of the property market coupled with a desire to leverage
between 20% to 80% of their current superannuation assets to potentially
build their own direct superannuation property portfolio.
The many tax incentives introduced by the Government into superannuation
mean that many Australians may potentially accumulate wealth faster in a
superannuation environment than they could by investing in identical assets
outside of their superannuation.
Although there have always been many benefits of investing in a superannuation
environment, it has only been in very recent times that Australians have
begun to show an increased interest in managing their personal superannuation
assets.
So why has this efficient investment vehicle been largely ignored by most
Australians?
One possible reason is that many feel that they have limited choice when
it comes to their superannuation money and, as such, have been restricted
to certain investments.
Many people may feel more confident investing in real estate but, until
now, unless their superannuation fund could afford the full purchase price
of a property, superannuation funds were restricted from borrowing money
to make this type of investment.
With the introduction of the Equiti Warrant Trust, superannuation funds can now
invest in direct property without the need to have accumulated the full purchase price.
Buying property through your SMSF not only enables you to leverage your current superannuation assets, it also provides the added benefits of both asset protection and tax efficiency.