All Topics / Legal & Accounting / Property purchase using SMSF money

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  • Profile photo of enigmaenigma
    Member
    @enigma
    Join Date: 2001
    Post Count: 12
    February 1, 2008 - 11:08 pm
    I hope you can assist with some advice regarding SMSF and the fund purchasing property.
    Since I am not sure what is possible, I am not clear on which direction to take regarding SMSF structure, and the ownership details of the property to be invested in using SMSF funds.
    Situation; I have about $100000 in a managed super fund, that can probably be better utilized with greater return, in the property market.
    I refer to API magazine from January 2008, under 'retirement strategies' on page 26.
    The super Fund isn't allowed to be the legal owner of a borrowed assett.
    What does this mean? Is it that the actual purchased property is not to be under the super fund's name? I would be purchasing a property under my company entity, then using the SMSF funds to invest into the property (pay down the bank loan). Is that possible? Or would the SMSF be borrowing the funds, and contributing the rest from its own funds?
    The assett held by the super fund has to be held in trust, while there's a loan against it, with the fund acquiring a beneficial interest in the assett.
    Not clear on how this works in lay terms.
    When the loan is paid out and the assett is transferred from the trust to the fund, no CGT is payable provided the trust isn't an 'active' trust.
    When can the loan be paid out? When transferring from trust to fund, do government duties apply, as a property sale would entail? What is an 'active' trust?
    …requirement for the trustee to be a 'mere nominee' (to avoid adverse CGT consequences) is that trust not be an "active holder" of the assetts"
    So how should this be setup?
    For a real estate asset, the trust must not be responsible for the management of the real estate. Rather a manager must be appointed to manage the real estate.
    There are ways that this can be done I guess. Would it be permisible for me to be the 'manager' or my wife, or does it need to be a duly authorized Real Estate Property manager?
    Also on page 27, it states that "….an investor can tap the power of a property's capital growth and – after the age of 60 – gain full access to it without paying any CGT…"
    In this case, I take it that since the property / SMSF funds are invested, they cannot be accessed until after retirement age. Is there a limit as to how many times this could be done? If the SMSF funds were split up (depending on amount in the fund, and purchase price of properties), then would it be possible for multiple properties to be purchased this way, knowing that their sale after retirement would be CGT free?
    Profile photo of Prop Investor88Prop Investor88
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    @prop-investor88
    Join Date: 2008
    Post Count: 6
    October 28, 2008 - 4:28 am

    Hi Enigma,

    I know what you mean… I saw a similar forum on another site actually…
    I was in a similar position myself, however a couple of friends of mine told me about these seminars that a company called the PiC Group were running. And I found them really helpful, they actually explain everything about how your can invest in property using a self managed superfund (SMSF), they can also help you set it up and run it as well if you would like. There is another free seminar coming up in November .. the 19th I think…if you are interested. It really helped me. just go to.
    http://www.picgroup.com.au or 1300 369 856

    Hope you have as much luck as I did.

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