Question about moving into home held in superannuation

Discussion in 'Accounting & Tax' started by drfuzzy, 27th Dec, 2015.

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  1. drfuzzy

    drfuzzy Well-Known Member

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    My Dad is 65. He has 3 properties, all in Victoria:

    Property A: PPOR house held in his own name
    Property B: house held in SMSF trust which he would like to move in to
    Property C: a block of units held in the SMSF and leased as holiday accomodation - the associated business is his primary occupation.

    Property C (the holiday apartments) have a non-recourse loan with NAB. The interest on the loan is about 5.87% and there is a $200/month fee attached to it. Dad would like to reduce this balance as he feel this is expensive debt.

    The plan is to sell Property A (the PPOR - worth about $300,000) and put that money into the SMSF to reduce the loan on Property C. He would then move into Property B.

    Questions:
    1) What would be the best way to achieve this? Would he need to sell Property B at arms length to himself from the SMSF? Could he avoid stamp duty?

    2) Is 5.87% and $200/month a reasonable rate for a non recourse loan in super? Are there many better deals around?
     
    drfuzzy, 27th Dec, 2015
    #1
  2. Banister

    Banister Member

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    Answer to question 1, selling to yourself is not arms length
     
    Banister, 27th Dec, 2015
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  3. Terry_w

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

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    Sounds like your dad has one property and in interest in a super fund which owns 2 properties.

    1. Sale of property from SMSF to dad or a related party. Stamp duty may or may not be payable depending on the state the property is in and the structure of the SMSF.

    2. not a bad rate, but $200 pm is high. Is this for C?
     
    Terry_w, 27th Dec, 2015
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  4. drfuzzy

    drfuzzy Well-Known Member

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    Hi Terry,
    Many thanks for your input.
    Yes, the non-recourse loan is for Property C - the units. I think the loan maybe around $500k. Dad is the only contributing member of the fund (by that I mean - the fund is just for him and the assets are all his). I know the SMSF has a bare trust and two individual trustees - my Dad and my brother. Aside from this I am not sure of all the details.
     
    drfuzzy, 27th Dec, 2015
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Is he retired, trp or still contributing to the smsf?
     
    Scott No Mates, 27th Dec, 2015
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  6. drfuzzy

    drfuzzy Well-Known Member

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    Hi Scott,
    Thanks for taking the time to reply.
    He briefly retired previously. But these days he operates a business like a motel related to the 10 units. The income the business generates helps to pay off the debt in the SMSF and pay for living expenses, etc.
    Does that answer your question?
     
    drfuzzy, 27th Dec, 2015
    #6