NO, NO, NO and a further NO for good measure.

Actually I cannot stress this enough. The people who jumped into this prior to 1999 are now facing no end of problems in re-arranging their affairs to manage upcoming issues.

The reasoning for not allowing the family home through a superannuation fund is based in the sole purpose test of superannuation, where the benefits accumulated in superannuation are only to be used for the purpose of funding your own retirement. The legislators at the time believed that this meant not acquiring your own house within the fund. Is it fair? Probably no, but since you can’t borrow in any case you need to have a massive superannuation balance in any case.

The difference between the two…

– A residential lease versus a commercial lease (i.e. termination rules and the like);
– Improvements on the house are more likely to add less value (from a sale perspective) than improve the quality of life (in the mind of the regulator) and therefore you are deriving a benefit before retirement;
– Being forced to sell the house at retirement to fund your retirement income would be politically terrible consequence;

The same goes for any non commercial premises (i.e. a holiday house) leased back to the members or their associates (i.e. family).

For background, I am run a superannuation consulting practice and have lectured extensively on the issue and have seen this end in tears too many times. It is an extraordinarily expensive exercise to fix (last one cost over $60,000 in stamp duty).

Craig