Buying CIP under SMSF

Apologies if this sounds bit noob.

Say I'm buying a comm property through SMSF. To land on 30% deposit which is 450k for 1.5m comm property, can I do following breakup:

SMSF contribution: 250k
Equity: 150k
Self funds: 50k

Q- Is this allowed or does the entire 450k need to come out of SMSF?
TIA

 

You could lend the SMSF Trustee money to buy the property, but lending it the deposit and it borrowing the rest from a bank wont work

 

Thanks Terry.
So for SMSF to borrow rest 70% - why will this not work? Is it due to me lending it the money or some other reason?

 

ATO has released some guidance on 'safe harbour' lending to SMSFs, You don't have to follow their guidance but get some legal advice on it if exceeding it. Basically they consider in uncommercial if you lend more than a bank would.

You will also not find a lender who will accept this.

 

But you should seek financial advice about other ways to potentially do it.

 

The loan must satisfy ALL the rules and all of the time. They are onerous but do-able. The SMSF cashflows will need to be considered. The capacity for any fund to meet all the cashflows and not have negative cashflow including if rent was unpaid should be explored. The fund would have no fallback position. Liquidity buffers are a key requirement. And a fund investmnet startegy with a sole asset may attract ato interest. They recently warned about this.

The whole arrangement need advice. SMSF, legal and financial implications. And credit advice. The duties, legal and GST will also need to be financed in some manner. eg SMSF resources, not a lender.