Hi All,
My hubbie and I are looking into setting up a Self Managed Super Fund to invest in property but as 2 of the Super funds we have can’t be rolled over to any other fund, we only have about 50K between us to invest from our current funds (actually they are probably worth even less as of today!!!!!!!).I’ve been told you can only get a max of 73% LVR in SMSF borrowings for property and that doesn’t give us enough to play with. So I asked about and was told to do a JV between our future SMSF and our trust. OK so I have been told it will cost about $2000 to set up the SMSF which by my research is an OK amount, but to do a JV we have to set up a company and JV paperwork (OK I accept that) and the cost is another $10K on top of the SMSF set up.
I know it doesn’t cost more than a few hundred to set up a company so I’m wondering what the extra $9500 approx is for? Does it really cost that much for JV paperwork or am I been taken?
Is it possible to do yoursef ie: set up company and get a solicitor to do the legal paperwork for a lesser cost?
Thanks
Whoever has told you that you can do a JV with your SMSF is pulling the wool over your eyes as it breaches numerous Sections of the SISA legislation.
These structures are outlawed and those that were approved previously have until June 2009 to recall them or face the financial consequences.
If you are asking whether your SMSF can borrow in it is own right and the cost for setting up the Installment Warrant / Bear Trust to undertake such borrowing then $9500 is a reasonable amount to be charged.
I have done about 8 of these deals since last September when the legislation changed and have seen clients charged upto $18000 for exactly the same structure.
Richard Taylor | Australia's leading private lender
Agreed with Richard.
The standard instalment warrant arrangement costs at least $10K+.
Be very careful with JVs involving super funds – it may potentially breach the most basic "sole purpose test", which could render your fund non-complying. In which case, drastically adverse tax consequences will arise.
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