Quick question about SMSF and house purchase?

Discussion in 'Accounting & Tax' started by wylie, 15th Nov, 2016.

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  1. wylie

    wylie Moderator Staff Member

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    Am I correct in assuming that my husband cannot buy a house from a trust that is controlled by me and my brother and put it in a SMSF?

    My husband has no ownership of anything in the trust, but he is listed as being able to have profits distributed to him, so I guess that rules this idea out?

    Just kicking around some ideas in my head.
     
    wylie, 15th Nov, 2016
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  2. Terry_w

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

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    Do you mean can a SMSF of which your husband is a member buy a property from a trust that you control?

    No. Not if it is residential.
     
    Terry_w, 15th Nov, 2016
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  3. wylie

    wylie Moderator Staff Member

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    Thanks Terry. I thought so from other questions similar to this. But thanks for the quickly reply because I can stop even wondering about this option.

    Much appreciated.
     
    wylie, 15th Nov, 2016
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  4. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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    Resi property cannot be bought/sold from/to a SMSF by/to a related party. Your husband is well and truly a related party of a SMSF member.
     
    JacM, 16th Nov, 2016
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  5. wylie

    wylie Moderator Staff Member

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    He is not a related party of a SMSF member. We don't have a SMSF. I was wondering if he could buy a property from a trust that he has no control over (but he is a beneficiary) and buy it in the name of a brand new SMSF that he would set up if this was possible. I guess he is married to me, and is a beneficiary and either thing (or both) rule this out for him.
     
    wylie, 16th Nov, 2016
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  6. Terry_w

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

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    I think you are confusing things Wylie - He can't buy it in the SMSF name. The SMSF trustee must buy it. He mght be a trustee, but he couldn't be the only trustee (and he shouldn't be trustee).
     
    Terry_w, 16th Nov, 2016
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  7. Paul@PAS

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

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    A SMSF may not acquire an asset other than a permitted asset from a Part 8 associate / relative of the vendor. s66 SISA. The vendor has a association with you thus you are a relative. Not permitted. There is also an avoidance rule if you were thinking of temporarily ceasing to act in any trustee capacity or even as a beneficiary of that trust etc. I will take a guess and the disc trust deed allow hubby as a potential beneficiary anyhow - eg a relative of yours. A permitted asset may include business real property and this definition excludes residential property in almost all cases.

    The answer is no. I thought you asked this a while back.
     
    Paul@PAS, 16th Nov, 2016
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  8. wylie

    wylie Moderator Staff Member

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    Thanks Paul. Different house, different holding entity, same problem.

    I asked many months ago if I could buy a different house that belonged to my parents from my father's name to mine, and open a SMSF to hold it. In light of the most definite "no" for that question, I just wondered if it changed things for my hubby to buy another house currently held in a trust that I am part of, seeing he is not related to me or the trust (except by marriage).

    To be honest, this house really has reached its potential. My brother is keen to offload it, but I prefer to hope the market rises a little more before we sell it. But land tax is eating about one quarter of the rent from this house.

    I could buy it myself in a trust (to minimise my own land tax) but the UCV is $570k so a trust isn't really helping much.

    We have agreed to hold it past 30 June next year and cop another hit of land tax and look at what the market does and look at selling (and settling) before 30 June 2018.
     
    wylie, 16th Nov, 2016
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