29/04/2016

What if I told you that you may be able to live in that lovely beach side investment property you bought using your self managed superannuation fund after all.

You started working at 18, worked for 40 years, saved money where you could, established a self managed superannuation fund and purchased a property through that fund using a limited recourse borrowing arrangement. It’s a really nice place, a quiet suburb off the beach somewhere along the coast. You’re starting to think it might not be a bad place to live the good life.

You know that living in this property is a no go while ever it remains in the fund – well turns out you might just be able to after all.

The Golden Rule

Whilst the property is held by the fund it must not be used as a residence by you or your relatives or dependants.

So what can you do then?

Transferring the property out of the fund to be held in your personal capacity may be an option for you. There are a few ways that this can be done depending on individual fund circumstances.

The property could be purchased by the Members from their fund in their personal capacity provided they pay market rate for it (and have the evidence on hand to prove that).

The property could be transferred to one or more of the Members as a so-called “in specie” benefit payment.

It is essential to speak to professionals (in different ways your lawyer and your financial adviser will both be able to assist) before you undertake to do anything with a property held by your fund to ensure that it is legal, compliant with relevant laws and in the investment interests of your fund.

Of course there may be tax and stamp duty implications to consider but as the property has been held in your super fund the tax in particular may not be as much as normal.

If this is sounding like a good idea, give us a call and let us cut through the red tape with you.

A little reminder that when you call us we will work with you and your financial adviser in giving you the best information, but we cannot provide financial advice to you.