Simple SMSF Q...

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Rdtn, 4th Mar, 2017.

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  1. Rdtn

    Rdtn Member

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    Hey guys...
    I just have a quick question about properties in SMSF. I thought it was rather simple but I can't find an accurate answer online anywhere. So, if I was to purchase a property via a SMSF, and hypothetically it was positive geared, does he excess cash flow (the amount not covering loan, rates, ect) have to be deposited back into the fund, or, an I able to use that excess cash flow however I like?
     
    Rdtn, 4th Mar, 2017
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    im not an SMSF advisor

    id suggest the income of the fund belongs to the fund and thhus must be used under the rules the SMSF trust document

    ta

    rolf
     
    Rolf Latham, 4th Mar, 2017
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  3. JohnPropChat

    JohnPropChat Well-Known Member

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    SMSF buys/inevsts in it. SMSF pays expenses (mortgage, council, insurance etc). SMSF receives income (rent, tax refunds). When eventually sold, SMSF also pays CGT (if any).

    You can draw from your SMSF as per normal super rules.
     
    JohnPropChat, 4th Mar, 2017
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  4. strongy1986

    strongy1986 Well-Known Member

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    Also be aware that you cant use it for private purposes
    Eg- you cant buy a holiday house and rent it out the balance of the year
     
    strongy1986, 4th Mar, 2017
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  5. Shady

    Shady Well-Known Member

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    Yes

    No
     
    Shady, 4th Mar, 2017
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  6. kierank

    kierank Well-Known Member

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    I am one of those people who would never buy property in a SMSF.

    Probably a topic for another thread :) :).
     
    kierank, 4th Mar, 2017
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  7. Rdtn

    Rdtn Member

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    Thanks guys. Thought this would be the case. Appreciate you clearing it up for me...
     
    Rdtn, 4th Mar, 2017
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  8. neK

    neK Well-Known Member

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    I'll explain this in another way.

    If you have a property that is positively geared that generated excess cash flow, could I use that money however i like?

    SMSF and you are two different entities. You may be a member of the SMSF, but it is still a different entity
     
    neK, 4th Mar, 2017
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  9. Terry_w

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

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    You wouldn't be purchasing in a smsf. But the trustee of the smsf would be purchasing.

    The smsf is a trust and it's income is not yours but belongs to the trust until it is distributed. The trust cannot distribute to a member until that member has met a condition of release.
     
    Terry_w, 4th Mar, 2017
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  10. Craig Seddon

    Craig Seddon Member

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    This may be a worthwhile read:
    http://asic.gov.au/regulatory-resou...of-risks/#trustee-obligations-time-and-skills
     
    Craig Seddon, 4th Mar, 2017
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  11. Redwood

    Redwood Well-Known Member

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    Hello there,

    Say you have a property, you pay a loan repayment of $1000 a month and rent is $1200. The SMSF will have its own bank account in the name of the fund and trustee. That account will be funded by your rollover and contributions. The loan repayment will be debited from the nominated SMSF account and the rent will be deposited in the nominated bank account.

    You cannot withdraw any amount from the smsf bank account without meeting a condition of release. You want to get on top of how it all works before setting up and buying a property. Buying property in Super is simple for many and hard for others....

    I hope that helps to get you on the right track.

    Cheers, Ivan
     
    Redwood, 12th May, 2017
    #11
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