Meezan

New Islamic SMSF solution enables Sharia-compliant property investing for Australian Muslims

Meezan Wealth Management, a rapidly growing Islamic financial services provider based in Sydney, has launched Al-Mustaqbal Islamic SMSF, a self-managed super fund (SMSF) solution designed for members of the Australian Muslim community who wish to invest in property for their retirement in a way that aligns with their faith.

Founding Director Rokibul Islam said the solution has been well received by Islamic medical and other professionals, and he expects strong interest from skilled migrants and Islamic family members who want to pool funds in an SMSF to purchase property.

Until now, Islamic Australians who wanted to save for retirement in a Sharia-compliant way could invest in Meezan’s Islamic superannuation fund, which largely decides where members’ money is invested according to Sharia principles. The Islamic SMSF now provides an alternative.

Members of Australia’s Islamic community, which is approaching one million people, overwhelmingly prefer to invest in property over other asset classes due to its physical nature and history of steadily increasing value. However, borrowing money to buy property and paying interest is forbidden (riba) under Islamic finance (Sharia) principles.

The Islamic SMSF structure overcomes this issue, as Meezan Finance can provide funding that follows Islamic Musharaka principles. Money borrowed to purchase the property, which is placed in an SMSF, is repaid as rent and dividends rather than interest.

This SMSF initiative follows Meezan’s launch of a low-cost digital investing solution for the wider Australian Muslim community last year, as part of a holistic approach to Islamic wealth management that also includes providing access to Islamic pensions, financial advice, and retirement and estate planning.

Mr Islam explained that the Islamic SMSF allows family and friends to pool their money to obtain a Sharia-compliant loan and purchase an investment property held in an SMSF, which they jointly control. This approach enables Muslim investors to develop a property portfolio for long-term capital growth.

“The amount people can borrow is not determined by their income but rather by the size of the regular employer compulsory and voluntary personal contributions to the SMSF fund. Rent from the property would be taxed at a flat 15% rather than higher personal income or company tax rates and when the property is eventually sold for a greatly increased price it will be tax free as it will be free of capital gains tax,” Mr Islam said.

He described the Islamic SMSF as a “religious, ethical and tax efficient win-win-win solution for Australian Muslims that was not available before.”

 

Source : propertybuzz.com.au