Purchasing property for my SMSF from my company

Hi,

My first post in the forums apart from the introductions so please go easy on me.
I hope I have posted this in the right area

I currently own a property I purchased under a company name as trustee for a family trust. Apart from the initial contract all the paperwork shows the company name only on the title.

I wanted to buy the property under my SMSF but after some research and conflicting advice I am thinking that an SMSF can not purchase a property from a related party. I was wondering though if the property is under a company name would this still fall under 'related party'? Being company title I thought directors can easily be chopped and changed. The property itself is a good investment and a part of my overall investment strategy but I would like to free up some funds to use it in other areas without letting it go completely.

Does anyone know if this transaction is legal?

If so the matter only gets more complicated from there as I would be personally lending money to the SMSF and then using a bare trust to purchase the property.

I want to make sure I set everything up properly from the beginning as had I done so initially I wouldn't be in this position now. Unfortunately the professionals I've spoken to have given me conflicting information, this is how I discovered this forum.

Thank you in advance.

 

Mate you don't know what is going on it seems. Your 'own' a property but it is it a company name? Is the company bare trustee?

your want to buy the property a under your smsf?

Do you mean you are a beneficiary of a discretionary trust with a corporate trustee which owns a property and the trustee wants to sell that to a SMSF trustee?

If it is residential it would be a a breach of the sis act.

Get some LEGAL advice - from a lawyer.

 

I'd be concerned about professionals advising/referring you to this forum.

My Uber driver provides good legal, financial & practical marriage advice too, pity he doesn't drive too well.

 

s66 of the Superannuation Industry (Supervision) Act places a prohibition on a fund acquiring a property that is residential property from a member or a related party (Part 8 Associate). A trustee of a FT would be a Part 8 associate. A trust with a discretionary object would likely include you as a beneficciary and also fails even if the company control etc is OK... In any event there is an avoidance rule in SISA which covers schemes to change trustees. directors etc.

It cannot be done.

The issue of a limited recourse borrowing facility is not excepted. And extends further to prohibit a LRBF for a s66 prohibited asset as well.

The advice you should have been given is VERY clear. I would be concerned for the lack of knowledge demonstrated.

Personally lending to a SMSF is tightly regulated and recent rules changes are now strictly enforced by the ATO. Its quite difficult (but still possible) for a SMSF to borrow from a member / relative etc and be compliant. The SMSF tax return now has two specific questions about this issue to assist audit focus.

 

Yes Terry unfortunately that was the case when I set up the trust. I paid my accountant to do it without completely understanding the the way it was being structured. I know that was stupid from me but to be honest in the past I didn't worry too much and just relied on my accountant.

No one referred me to this forum, what I meant was doing some research online led me here.

Thank you Paul. That's as clear as it gets.

You are right, I was not impressed with the advice received and lack of certainty hence why I now do my own research and try to gain a complete understanding of what it is im doing.

Although I have made a number of property investments over the years they were always straightforward being bought in my name. It is only now that I am learning about the importance of long term planning and the structure of how things are set up.

 

wasn't Idn Battuta the Islamic traveller from about 11th century?

 

Sure is, the world's original backpacker.

 

14th century it seems. There were many travellers before him - Faxing, for example, from China went to india, srilanka, afganistan and indonesia etc in around the 5th century.

 

No doubt there are countless of extensive travellers throughout history each with remarkable stories in their own right. After visiting the Ibn Battuta mall in Dubai and reading his travel tales he stood out for me the most. Even to cover Ibn Battuta's itinerary this day and age with all the modern travel technology
would be a feat let alone having done so almost 1000 years ago.

 

Imagine the FF points after this time