At Superannuation Warehouse, we are specialised in SMSF administration. We can execute the setup of a Bare Trust structure where the Trustees have decided to purchase a property with loans. The typical structure is set out below:
The SMSF can invest in commercial or residential property, but this cannot be your residence. You cannot have any dealings with a related party when investing in residential property, so you cannot live in the property, use the property as a holiday house or have a family member live in it. It should be for the investment as the sole purpose for your SMSF.
Some important points regarding the use of an SMSF for property investment are as follows:
An SMSF cannot incur any loans. To purchase a property, an SMSF can use a Limited Recourse Borrowing Arrangement. This is where the Trustees would provide a guarantee to the bank for the loan. Trustees can use a mortgage broker to help them find the most suitable loan for their circumstances from a panel of lenders.
Repair and Maintenance
When repairs and maintenance are undertaken in an investment property, these costs can be deducted in the SMSF. See these guidelines from the ATO for the difference in repairs vs. improvements.
What name should the SMSF use with property investment?
Use the Custody Trust’s name, for example:
• if individual trustee “John Summers ATF ABC Custody Trust”
• if corporate trustee “ABC Pty Ltd ACN number ATF ABC Custody Trust”
Land registries generally do not accept any reference to a Custodian Trust. Therefore, the transfer of land should simply be registered in the custodian’s legal name, for example:
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Superannuation Warehouse is based in Melbourne and have clients throughout Australia. We deliver our SMSF administration services in an efficient and paperless way. This efficient service means a competitive fee to you. Our low ongoing fees will enable you to take control of your Super.
Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.