Investing under Super

Discussion in 'Investment Strategy' started by Just-An-Investor, 27th Jan, 2019.

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  1. Just-An-Investor

    Just-An-Investor Active Member

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    Dear All,
    I am looking at buying (residential) property with commercial zoning with an intention to build a medical centre. If I purchase the property under Super, are there restrictions for knock down and rebuild for commercial use. I have no intentions to sell the finished property but to rent it.
     
  2. kierank

    kierank Well-Known Member

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    Do you have enough cash in your SMSF to fund the development?

    If not, do you have sufficient assets outside Super to offer as security for the loan?
     
  3. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Yes many restrictions, especially if the smsf borrows to acquire it.
     
  4. Just-An-Investor

    Just-An-Investor Active Member

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    Thanks for your reply. Funds need to be borrowed. Would that matter
     
  5. Just-An-Investor

    Just-An-Investor Active Member

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    Thank you for your reply. So if the funds are borrowed for the purchase would that mean that it would make it complicated for the knock down?
     
  6. Just-An-Investor

    Just-An-Investor Active Member

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    Can we at least renovate the property for the time being to suit the medical facilities. These will include but internal and external changes.
     
  7. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    It would be a breach of superannuation law. from memory s 66 or 66A or 67 Sis Act
     
  8. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    You should look up the ATO's interpretation of the law. Can't change the character of the building.
     
  9. Just-An-Investor

    Just-An-Investor Active Member

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    Thank you. Tricky situation. These rules do not apply for outside super purchase?
     
  10. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    no
     
  11. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Are you a medical professional? If so then you are able to potentially borrow the total project costs without LMI out side of the SMSF.
     
  12. kierank

    kierank Well-Known Member

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    What @Terry_w said.

    TBH, I am not a big fan of buying/developing property in one’s SMSF; the law is too complicated for me, there are too many restrictions for me, one can easy make one’s smsf non-compliant, ...

    The above is only my opinion; I know others have a different opinion. I would suggest you tread carefully, do lots and lots of research, find a team of advisors who specialise in this area, ...
     
  13. Just-An-Investor

    Just-An-Investor Active Member

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    Thank you. Yes I am a medical professional. My primary interest is to buy the property under SMSF and the fit out loan will be outside super.
     
  14. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Get some legal advice as generally the tenant might to and own the fit out.
     
  15. Trainee

    Trainee Well-Known Member

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    Why?
     
  16. Scott No Mates

    Scott No Mates Well-Known Member

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    Buy it in a unit trust and when you've developed it, buy the units in the SMSF (If that's possible) - I got nfi.
     
  17. JohnPropChat

    JohnPropChat Well-Known Member

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    You need good advice. Talk to an SMSF specialist or a lawyer.

    AFAIK, SMSF can buy a commercial property with/without an LRBA. The SMSF can then lease the property to your company at arms length terms (rent, outgoings, fittings etc).

    @Redwood lives and breaths SMSFs. Have a chat with him.