property can be acquired by the SMSF.
Where the business real property
is held by an individual member or
members of the SMSF, the property
can be contributed into the SMSF
this is commonly referred to as an
`in-specie' contribution.
limits depending on a number of
factors, such as age, income levels and
meeting specific working conditions.
For example, it is possible for an
individual member who is between
the ages of 60 and 65 (and subject to
other conditions) to contribute up to
$485,000 to superannuation in one
financial year. With mum and dad
in the SMSF, this could equate
to $970,000.
business, the member may also have
the opportunity to utilise what is
referred to as a `CGT cap' under the
small business CGT concessions,
contributing up to an additional
$1.315 million (for the 2013/14
financial year).
property can continue to be leased to a
related party of the SMSF, provided it
is on commercial terms.
to borrow?
there are a number of very strict rules
governing what the borrowed money
can be used for. Loans of this nature
are commonly referred to as a `limited
recourse borrowing arrangement'.
can borrow under an instalment
warrant arrangement, such that the
lender has limited recourse over the
property (and no other asset of
the SMSF).
must be held on trust for the benefit
of the SMSF. Additionally, the SMSF
must only use the borrowed money for
the property alone, and cannot use the
borrowing to improve the asset.
that the SMSF trustee doesn't have to
borrow from a bank and third party
lender. In fact, the SMSF can borrow
from a related party of the SMSF.
the SMSF, you should consider
the costs of doing so including
establishment costs, legal fees, stamp
duty considerations and ensuring that
there will be enough superannuation
contributions or rent received by the
SMSF to fund loan repayments.
costs or issues?
the property acquisition and will vary
from state to state. However, where
the property is acquired by the SMSF
from an individual (who is a member
of the SMSF), concessional rates of
stamp duty may apply. For example,
in NSW there is a concessional stamp
duty rate of $50, subject to meeting a
number of conditions.
into the SMSF, you should consider
the tax cost, namely capital gains tax.
However, where the premises are used
in the member's business, it may be
possible to access small-business
CGT concessions.
importantly, you should consider
both the advantages and costs of
doing so. It is strongly recommended
that you seek the advice of a tax and
superannuation professional before
entering into the transaction.
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expense
use the borrowed
money?
by the member?