Hi Everyone. Looking for some advice regarding how to set up structure for a property development. Here's the detail. We have 2 side by side properties that will be developed. I own 1 property in my name and the 2nd property my wife and I own in our SMSF. We are hoping to either do the development ourselves or sell as DA approved. What are some options to carry this out? My questions include the following. - To cover costs should we set up a company and pay this company to carry out all the work? - If so, can I & the SMSF pay a company, that I am a director of, to perform work for myself and my SMSF? I'm planning on seeing my solicitor and accountant shortly but just wanted some different opinions first. Cheers.
You will need some specific legal and tax advice. Is there a loan on the SMSF property? If so the SMSF cannot develop.
Having the SMSF as an owner can place quite a few more restrictions as Terry has said. SMSFs are not allowed to use borrowed funds to develop, the only way the SMSF side can be developed is if it was bought with SMSF funds and the SMSF has enough funds in it to handle the construction etc. You only option might be to sell as an approved site if there is appetite for that or simply sell them together as a project site for someone to buy without DA.
Hi Terry, Yes mate at the moment there is still a loan. Hoping to have it paid down soon though. Can I start the approvals process before loan is paid out?
A smart property subject to a lrba cannot be changed so no development. Seek your own legal advice on whether this includes lodging da etc
Yes. A simple matter overlooked can be fatal. eg The SMSF trustee must be reverted as legal owner and not held in the bare trust. Then the property needs to remain unencumbered OR subject to a charge. And a range of other issues to avoid non arms length income issues and SISA breaches. eg s66 prohibition on acquisitions. - Can the real property exemption be used ? I would recommend a superannuation focussed lawyer such as DBA Lawyers.
