A Self-Managed Super Fund (SMSF) is a private super fund that you manage yourself. So instead of putting your money into a retail or industry super fund, you are managing your super fund yourself and decide how the funds are invested and their insurance.
Can I purchase residential/commercial property with my Self-Managed Super Fund?
In short, yes!
You can purchase a property (both residential and commercial) via your SMSF. This is provided you satisfy the all following points:
- The property must not be obtained from a relevant of the member of the fund;
- The property must not be resided in by a member of the fund or a member’s related parties;
- The property must not be rented by a member of the fund or any of their related parties;
- The fund will only provide retirement benefits to its fund members (also known as the Sole Purpose Test“)
Note that where the SMSF purchases a commercial property, it can be leased to a member of the fund for their business. However, the commercial property must be leased at the market rate. The underlying rationale is that the property is not being used for personal use and therefore permitted (i.e. the fund member is solely and exclusively using the commercial property for its business).
How do I set up my SMSF?
Broadly speaking, setting up your SMSF includes:
- Deciding on the members of the SMSF
- Deciding on the SMSF Structure
- Establish the SMSF Trust Deed
- Applying for an ABN and registering the SMSF with the Australian Taxation Office;
- Opening a bank account for the SMSF
For more information head over to the Australian Taxation Office website.
Can I use a purchased residential property as my primary residence after I retire?
No, unfortunately. Your retirement is no reason for you to use property owned by the SMSF for personal use.
In fact, what you could consider arranging for the ownership of the property to be transferred to you. This means you will hold the property in your capacity as legal owner, which would then permit personal use (i.e. the property is your primary residence).
Of course, we would recommend you speak with your tax accountant before going through with the title transfer to understand whether there are any tax implications for doing so.
Contact W Legal Group today!
Speak with the team at W Legal Group to understand your obligations in managing your SMSF, and what you need to know before buying a property with your SMSF.
