Self Managed Super Fund (SMSF)
SMSFs can offer a number of benefits, but they aren’t for everyone. Likewise not all conveyancers are versed with the added complexities arising from a SMSF or trust set up
Even more so since the introduction of the Duties Online Form, which requires both buyers and sellers to disclose the holding structure of the property. Failing to do so could be problematic and costly come tax time. As we like to say its always better to get it done right the first time!
For further information tailored to your situation please just get in contact with our office. Not only will we give you individualised advice, we'll also consult directly with your accountant and provide them with the docuemtnts they'll need to finalise the financial side of things.
Purchasing Through A SMSF
Since changes to superannuation legislation in 2007, which allowed for self-managed super funds (SMSFs) to borrow money for property assets, there has been a dramatic increase in the number of people setting up a SMSF in order to purchase an investment property. Whilst there are many benefits to this, there are strict rules which must be followed.
An SMSF can borrow money to buy any type of asset that it is otherwise legally able to invest in. This includes property, both residential and commercial. There are some rules however you need to be aware of;
Rules for SMSF Purchasers
No Property Development
An SMSF can generally not buy an asset using borrowed money to buy an asset to be improved upon or redeveloped while the loan is still outstanding.
Limited Recourse Borrowing
To ensure that you do not place other SMSF investments at risk, the asset that is purchased under a borrowing arrangement must be held in a specific holding trust until the loan is repaid (often referred to as a “bare trust”). Further, the only asset that can be used as security for this loan is the asset that is held within this trust.
Single acquirable asset
The asset purchase with borrowed money must be a single acquirable asset as defined by superannuation law. This generally means that the borrowed money can only be used to buy one property. You cannot, for example, purchase more than one property under the one borrowing arrangement, nor could you purchase an apartment where the apartment and any associated car space are on separate lots unless there is some legal restriction on selling the car space lot separately from the apartment lot.