Selling my IP to my SMSF

Discussion in 'Superannuation, SMSF & Personal Insurance' started by MyDarlinghurst, 22nd Jan, 2018.

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  1. MyDarlinghurst

    MyDarlinghurst Well-Known Member

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    If i have a IP in the country worth say 120k can i sell it my SMSF ?

    i guess a valuation would be required if i am?
     
    MyDarlinghurst, 22nd Jan, 2018
    #1
  2. Terry_w

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

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    not unless it is business real property
     
    Terry_w, 22nd Jan, 2018
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  3. MyDarlinghurst

    MyDarlinghurst Well-Known Member

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    NO ITS RESIDENTIAL UNIT not a business unit

    i want to sell it to my SMSF maybe for about 120k
     
    MyDarlinghurst, 22nd Jan, 2018
    #3
  4. Trainee

    Trainee Well-Known Member

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    Then your not allowed to do it.
     
    Trainee, 22nd Jan, 2018
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  5. Propertunity

    Propertunity Well-Known Member

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    As the others have said, no, you’re not permitted to do so.
     
    Propertunity, 22nd Jan, 2018
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  6. Paul@PAS

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

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    No. Valuation has no relevance. Superannuation Industry (Supervision) Act s66 prohibits resi property being acquired from a member, relative, associate etc. No exception other than if business real property which it seems not. BRP typically refers to a shop, factory etc and the use of the property is presently within a business etc.
     
    Paul@PAS, 23rd Jan, 2018
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  7. Terry_w

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

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    Sell the property and let the SMSF buy another - simple solution.
     
    Terry_w, 23rd Jan, 2018
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  8. Scott No Mates

    Scott No Mates Well-Known Member

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    Or lease it out to a business, get them to submit a DA for the use & convert it to a business use.
     
    Scott No Mates, 23rd Jan, 2018
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  9. Paul@PAS

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

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    May not be as simple as that. Zoning etc can all prevent USE as business real property. If a lease is made as a residential tenancy lease for example and the occupant legit uses the property in their business its just not enough. Same as most boarding houses arent considered BRP.

    And there is a anti-avoidance rule if attempts are made to bypass s66. A genuine change of use can work. eg a residential cottage refitted and DA for use by a dentist. Commercial lease and use of premises at time of transfer is used in that manner (not merely available). Timing is very important. Changing property from resi to commercial isnt easy in some areas. I recall seeing a case where a resi was converted to a brothel and it lacked a DA. The owners use breached sole purpose test as was resi use by the owner to then convert to a brothel.

    Often something that needs legal advice due to technical concerns.
     
    Paul@PAS, 23rd Jan, 2018
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  10. Redwood

    Redwood Well-Known Member

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    Hi there,

    Most popular question these days, unfortunately, the unit most likely will not meet the definition of business real property ("BRP") - which has a ruling providing specific examples (http://law.ato.gov.au/atolaw/view.htm?locid='SFR/SMSFR20091/NAT/ATO'&PiT=99991231235958).

    This is as you will be transacting with a related party and will be specifically prohibited.

    Cheers Ivan
     
    Redwood, 16th Feb, 2018
    #10