Property Improvement within SMSF

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Lightning, 8th Jun, 2017.

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  1. Lightning

    Lightning Member

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    21st Dec, 2016
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    Howdy

    I read an article the other day saying that it was possible to make improvements to property held within Super as long as this was not done from borrowed funds.

    I was of the understanding that you could not make any improvements regardless of whether the funds were burrowed or not (i.e. from your cash contributions).

    Can someone confirm?
     
    Lightning, 8th Jun, 2017
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes it could be possible
     
    Terry_w, 8th Jun, 2017
    #2
  3. Redwood

    Redwood Well-Known Member

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    In relation to a LRBA SMSFR 2012/1 is the ruling - generally best to use cash reserves to iumprove / repair an asset. The ruling provides specific examples, if in doubt use smsf cash. Remember all invoices in the name of the smsf.

    Cheers Ivan
     
    Redwood, 8th Jun, 2017
    #3
    Ross Forrester likes this.
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There also can be serious issues if the works are performed by a member. eg If a tradie builds a extension it is a higher cost and part of the cost. If member does it its just a materials cost so the enhanced value could be considered a non-concessional contribution for the labour. A breach of s66 which does not allow a fund to acquire an investment from a member, associate or relative. An in-house asset limited to 5% ?

    Seek advice.
     
    Paul@PAS, 13th Jun, 2017
    #4