Are you thinking of purchasing property through your SMSF? There are rules and restrictions that are important to understand. Here is what you need to consider before you do.
SMSF Property Rules
While you are allowed to purchase property through your SMSF, you are required to comply with certain rules. These rules state that the property must:
- Meet the ‘sole purpose test’ – meaning the sole purpose of investing in the property is to provide retirement benefit to fund members
- Not be acquired from a related party – this applies to all members of the fund
- Not be lived in by a fund member or any fund members’ related parties
- Not be rented by a fund member or any fund members’ related parties.
Despite these rules for purchasing a house, you could potentially purchase your business premises through your SMSF and pay rent, at the market rate, directly to your SMSF.
What other costs are involved in purchasing property through your SMSF?
SMSF property sales may have a range of fees and charges you should consider. These fees can add up and will reduce your super balance.
You should consider and determine all the costs before signing up. Some of these include:
- Upfront fees
- Legal fees
- Advice fees
- Stamp duty
- Ongoing property management fees
- Bank fees
Prior to making this very important decision, you need to seek advice from an Independent Advisor. At Lockwood & Ward, we have tax accountants who are also fully qualified to provide SMSF advice.
To speak to someone directly, about your situation and superannuation strategy, call us today on 02 9299 7044.