SMSF Property Purchases
Property Law & Conveyancing
Newcastle Conveyancing Specialists for SMSF Property Purchases
Buying property through a Self Managed Superannuation Fund (SMSF) can have great advantages for your retirement.
It allows you to use your superannuation to invest directly in property, which can provide an income stream for your retirement and capital gains with the property held in a structure which has many tax benefits.
It is also possible to borrow to fund your purchase using your SMSF but this requires the setup of a bare trust for the purchase, which holds the asset as custodian until such time as the loan is paid off.
There are strict legal requirements about the types of properties that can be purchased in an SMSF and the use of such properties.
Burgess Thomson are legal specialists in SMSF property purchases and can assist with this process.
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Find out more about how we can help Buying Property in a Self Managed Superannuation Fund (SMSF)
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Property You can Purchase in A SMSF
Generally property purchased in a SMSF must be an arms length transaction and cannot be purchased from a related party. Related parties cannot also obtain any benefit from the SMSF. This means the members of the SMSF or any related parties cannot live in or rent the property from the SMSF. The types of properties purchased must therefore be commercial properties or residential properties that are purchased in arms length transactions. It is also possible to purchase a business premises using your SMSF however commercial rent must be paid by the business to the SMSF and a market valuation is required.
Finance for your SMSF Purchase Using Bare Trusts
It is possible to borrow to assist with your SMSF purchase, but a bare trust must be setup for this purchase to ensure that the borrowing is a limited recourse facility. This means that the assets of the SMSF are protected in the event the loan is not repaid, and the only security is the property purchased which is held in the name of the bare trust. The asset is segregated in a bare trust which acts as a custodian for the purchase. Once the loan is repaid, the title to the property can then be transferred to the SMSF and if done correctly additional transfer duty should not be payable on the subsequent transfer to the SMSF.
Conveyancing for your SMSF Purchase
It is important that the bare trust has been established before exchanging contracts and that the entity is correctly described on the Contract for Sale. There can be transfer duty implications if this is not done correctly, so you should seek expert advice from us before exchanging contracts.
Transfers of business Real Property to SMSF
It is also possible for the SMSF to purchase business real property from a member of the SMSF. This allows your business to then rent the property from the SMSF. There are transfer duty concessions available for the transfer of member held business real property to the SMSF in certain circumstances. Contact us to discuss how we may be able to assist you to obtain these concessions.
Need further advice about using your Self Managed Super Fund to purchase property? Contact us and we would be happy to discuss further.
