Transfer property into SMSF

Discussion in 'Superannuation, SMSF & Personal Insurance' started by ArnoldInSydney, 8th May, 2020.

Join Australia's most dynamic and respected property investment community
  1. ArnoldInSydney

    ArnoldInSydney New Member

    Joined:
    8th May, 2020
    Posts:
    3
    Location:
    Sydney
    Hi all,

    I think this is not possible, due to me being a member of the fund, but am hoping a few more knowledgeable people here can say otherwise. Also please don’t say what we should’ve done 20 years ago. Hindsight is a wonderful thing and, like us all, things have changed over 20+ years.

    My family’s superannuation is managed by my father, who over 25 years ago created a self-managed superannuation fund. Then when I began work as a teenager my super was put in there. And the same for my brother - his was put in there too.

    Fast forward 20 years, I now work in a full-time job and earn income PAYE. And so does my brother. (We are both in our 40s, married, and have our own families).

    So that is is complication #1 - this super fund contains all our family super. My dad’s accountant knows who has what percentage share etc …

    Complication #2 - my wife and I also own a small business. About a decade ago, we purchased the building where the business now runs and, rightly or wrongly, bought the premises in the company name (the accountant who told us to do this has since passed away). The building is worth approximately $1.5m and the outstanding loan over it is $500k (bank valued it last year for a refinance at $1.4m, we think it’s worth closer to $1.6m)

    With interest rates now down to near zero levels, like many self funded retirees, our parents are seeing their income drop. Therefore, what we want to figure out how to do is:

    Sell our business premises to the Super Fund for $1.5m.

    Then the business will pay rent to the super fund for market value, roughly $6k per month.

    So … is this possible? From our friend Google - SMSFs and property - Moneysmart.gov.au it seems we can’t …. :-(

    I’m assuming we can’t but would love to be told of a way we can.

    Thanks in advance.

    Arnold
     
  2. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    29,619
    Location:
    Australia wide
    Yes it is possible and could be a good idea too. But you need to consider a lot, especially with estate planning, pensions and death so get legal advice in conjunction with your financial planner.
     
  3. ArnoldInSydney

    ArnoldInSydney New Member

    Joined:
    8th May, 2020
    Posts:
    3
    Location:
    Sydney
    wow ... obviously i have no legal or financial training, and i understand this is a forum so do not expect this to be "legal advice" etc. but according to the link i posted, there is this:
    • not be acquired from a related party of a member
    • not be lived in by a fund member or any fund members' related parties
    • not be rented by a fund member or any fund members' related parties
    I am the only shareholder of my company, and my company owns the building. And my business would also want to keep renting the premises. Doesn't that make me a "related party" ?

    And believe me, I am stoked to you said it was possible. I'm just confused. :)
     
  4. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    29,619
    Location:
    Australia wide
    'business real property' can be sold to the trustee of a related SMSF by a member or related party of a member. This is generally commercial property, or property other than residential.
     
    ArnoldInSydney likes this.
  5. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    29,619
    Location:
    Australia wide
    Redwood and ArnoldInSydney like this.
  6. ArnoldInSydney

    ArnoldInSydney New Member

    Joined:
    8th May, 2020
    Posts:
    3
    Location:
    Sydney