SMSF purchase, short on funds

Sorry if commercial then yes it can be acquired from related party

 

Is your wife in the SMSF? You can have up to 4 people in it, so you could roll her Super into it to increase it's balance.

Then as others have said concessional and non concessional contributions for both of you could be used to top it up if you have the funds available to do that.

 

We have in the past owned a commercial property part in SMSF and part personally . As the funds became available , the SMSF bought us out .

Was awhile ago so not sure on specific structure .

Cliff

 

Would have been tensnts in common in unequal shares. This could give rise to stamp duty depending on the state and structure of the smsf.

In many states transfer of units of a unit trust is exempt from duty.

Cgt event would be triggered too.

 

The concern with a related party commercial sale (or transfer in-specie) arrangement in NSW is that OSR have a "special rule" that imposes limits on new members and likely segregation of the asset after it has transferred. The s62A NSW Duties Act concession is given for transfer of the property to the SMSF and that section contains these operative limits. The former owners of the property (Mum and Dad as an example) should also be the sole fund beneficiaries following the transfer and thereafter. So adding adult child members etc later can taint this and could (if OSR were to review it) result in full duty. The alternative mechanism is to segregate the asset from new members of those who were not former owners. This can complicate annual reporting and accounting and the accountant and trustees must undertand this limit or errors may result.

Of greater concern is a sole property owner (lets say its Dad) who transfers property to a fund with two - four members. The asset must be segregated until the former dies. Ideally an additional strategy involving reversionary pension should also be explored for Dad commencing immediately so that in the event of say Dad's death that a forced cashing event does not impose a obligation on the fund to dispose of the asset. The reversionary pension beneficiary could be Mum which complies with s62A. Thereafter mum is released of the limits imposed by s62A.

Few advisers give advice on this trap and it can have consequences.

 

Hi Hobo,

Thanks for your reply.
This is what I understand, I might be wrong.
Non concessional contribution for this year is capped at $180k from next year onward it will be $100k. Yes post tax
Concessional contribution is $30K used to be 25K. I think I can contribute up to 30k and after that it might not be worthwile to contribute because of tax.

 

You may also be able to bring forward 3 years non-concessional contributions.

 

Also some other options eg.. paying a year of rent upfront prior to settlement..

 

thanks @Bran I 'found' 3.5K I had no idea I had 'lost'

 

Ill give you my bank details. I'm taking 10% cuts.

 

Bran
you would want to be very careful to do this, right?

Cheers Ivan

 

Ivan touches on a issue. The SIS Regulations refer to arms length rental by reference to the expression "lease arrangement" which has no defined meaning and the issue of pre-paying rent may fall outside this if the arrangement was not on arms length terms. That could give rise to a non-arms length income issue. In the world of real estate prepaid rent is commonly seen but generally a year or so in advance is unorthodox.