Purchasing property within a Self-Managed Super Fund (SMSF) is an attractive investment strategy for many Australians. However, navigating the complexities of SMSF property acquisition requires a clear understanding of the legal framework. Here’s a brief guide to help you make an informed decision.
To buy property in an SMSF, the property must meet the sole purpose test, meaning it must solely benefit the fund’s members’ retirement. This ensures that any property purchase aligns with the core purpose of the superannuation system—retirement savings.
Before purchasing property, ensure your SMSF is properly set up with a trust deed and trustee arrangements. This is the time to get accounting advice.
SMSFs can finance property purchases using their own funds or by borrowing through a limited recourse borrowing arrangement (LRBA). If you choose to borrow, make sure the loan complies with strict regulatory requirements, and it’s crucial to have legal advice early in the transaction.
SMSFs can purchase various types of properties, including residential, commercial, and industrial. However, properties must not be used by fund members or related parties, with the exception of business real property used for business purposes by a related entity.
By following these steps and seeking professional guidance, you can safely invest in property through your SMSF and set yourself up for future financial success.
Contact Holt Ronan Lawyers today to see how we can assist you in the process.
Disclaimer: This advice is general in nature and is not intended to be legal advice.
If you would like legal advice, please call our office on (07) 5619 0440 and we would be pleased to assist you.
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