Recently the Australian Taxation Office (ATO) has released some information on their website outlining tips and traps when using a Self Managed Superannuation Fund) SMSF to invest in property.

Included are some of the following:

1.    Adhering to the SMSF investment strategy, particularly concerning liquidity of assets.

2.    Borrowing.  Ensuring that the right loan is in place and the documentation meets legislative and regulatory requirements.

3.    Related party transactions.  Ensure that due consideration is given to:

a.    In-house assets;

b.    Sole purpose tests; and

c.    Arms length requirements.

4.    Use of property in retirement.  You are not able to rent a residential property from your own SMSF.  The asset must first be sold or transferred out of the fund.

5.    Insurance.  Trustees must consider various insurance requirements including:

a.    General insurance to cover damage or loss to the property.

b.    Third party liability.  As a property owner, i.e., the SMSF may be sued; and

c.    Death and total and permanent disability insurance.  For when business real property is used in a family business.

6.    Property held offshore.  There may be greater risk exposure for property held offshore as trustees may be unaware of the local regulations and requirements.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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