Hi Terry,

Thanks for your input and to make appropriate corrections and bring the question up to date :

Yes, being technically correct, “The trustee of our SMSF is considering purchasing 2 properties in line with the fund’s current written investment strategy.” Except where clearly referring to us as individuals (eg 4(c)) all references to “we” in my original post refer to us in our role as directors of the corporate Trustee of the SMSF or to the Corporate trustee of the SMSF itself (as an incorporated body).

To answer your further suggestions / questions :

Have you considered a widely held unit trust? 3 unrelated SMSFs could hold units in the unit trust with the unit trust borrowing and developing.

Yes, we have considered, and at this stage we are most likely to be pursuing a unit-trust structure. Final makeup of the unitholders is undertermined. It may be a related-party Trust (Sec 13.22(c) trust) or an unrelated party Unity trust (limit 50% ownership to any one group of related unitholders).

Could the fund develop one block at a time?

Yes, again this is a key part of the overall strategy.

Could you buy jointly with the fund? You could borrow to do so, but not mortgaging this property.

Again yes, as alluded to in 4(a) we (as individuals) have access to additional funds. However at the time of writing the initial post I believed that it would have to be contributed to the fund as non-concessional (bring-fwd) contributions. We now know that it can be lent to the fund instead as one option.

2 separate SMSFs owning one each or both as tenants in common?

Also open to this idea and happy to hear from potentially interested parties.

Joint venture with a builder and the SMSF?

Again, as per 4(b) of my original post we are very open to the overall concept but did not want to give away 50% of the profits simply for making money available for development to the project (based on a
strict purchase price/development price ratio).

We now understand that the SMSF can enter into an appropriately structured Development Agreement with a Builder / “JV partner” to achieve the desired financial outcomes without compromising its compliance with relevant portions of the SIS Act.

Again, we are happy to receive responses form potentially-interested parties.

Thanks Terry.
Warren.

• This reply was modified 6 years, 8 months ago by  Warren K..