IP owned by Super via company used for instalment warrant

Anyone know what happens when the instalment loan for a super owned IP has been paid off? The use of a company was necessary because of the set up of the recourse loan, but given the loan is paid off, the function of having a company is now redundant.

I don't see the point of having to pay ASIC annual fee for a company that no longer has a purpose, but the trouble is , it's that company now which is listed ion the Cert of Title!

I would just want to have the name of my super fund as the owner. It seems in the rush for people to get on board for this loan product there has been a shortfall in knowledge as to how this has allowed to occur( at least my accountant can't answer this for me)

Is there a cost effective ( ie something I can do myself without having to engage a lawyer) way of changing the name on the title to that of my super fund without incurring any govt fees and charges given that really there has been no change in beneficial ownership?

Appreciate any suggestions and hopefully this can be something people can be made aware of if they decide to go down this road.
 
Anyone know what happens when the instalment loan for a super owned IP has been paid off? The use of a company was necessary because of the set up of the recourse loan, but given the loan is paid off, the function of having a company is now redundant.

I don't see the point of having to pay ASIC annual fee for a company that no longer has a purpose, but the trouble is , it's that company now which is listed ion the Cert of Title!

I would just want to have the name of my super fund as the owner. It seems in the rush for people to get on board for this loan product there has been a shortfall in knowledge as to how this has allowed to occur( at least my accountant can't answer this for me)

Is there a cost effective ( ie something I can do myself without having to engage a lawyer) way of changing the name on the title to that of my super fund without incurring any govt fees and charges given that really there has been no change in beneficial ownership?

Appreciate any suggestions and hopefully this can be something people can be made aware of if they decide to go down this road.

You should read the custodian deed - you will find the title must be transferred to the SMSF trustee once the loan has been repaid.

You will need to transfer title and cover any stamp duty issues. In NSW if you are not careful there could be stamp duty again.
 
Thanks very much for that Terry.

It would seem that I need to go back to the bank that lent me the money as it would have been the bank that required the company in the first place? Surely that should have been done by them at the time of closing out the loan / issuing the cert of title ?
 
Thanks very much for that Terry.

It would seem that I need to go back to the bank that lent me the money as it would have been the bank that required the company in the first place? Surely that should have been done by them at the time of closing out the loan / issuing the cert of title ?

Nothing to do with the bank!

It is the SIS Act which requires a custodian trust. You would have set that up before entering into the contract to purchase the property. You would need to get some legal advice on how to transfer title and the stamp duty issues - if any.
 
We'll I appreciate the heads up on that, cos I was ready to have a go at the bank ... ( still , you'd think that sort of info would have been been known by my accountant given he deals with setting up these structures !)
 
We'll I appreciate the heads up on that, cos I was ready to have a go at the bank ... ( still , you'd think that sort of info would have been been known by my accountant given he deals with setting up these structures !)

Yes, you would think so, but this is really legal advice so maybe not. It may also be rare for an advisor to see a loan paid out as most last 20+ years.
 
As mentioned above, need to be careful to avoid double stamp duty, suggest you seek advice and consideration will need to given to the state of incorporation of the company and bare trust, name on contract of sale and stamp duty in the relevant state. Alot of this will depend when you entered the contract.

Cheers, Ivan
 
Thanks for that, but really how many of us who have been setup into these had been told that is what would occur at the end? The lawyers on here would no doubt say caveat emptor and you should have undertaken your due diligence, but really when you are seeking professional advice in the first place in setting these things up you rely on their superior knowledge in promoting these products that are going to be used to assist you in providing for your retirement.

There was no " by the way you do know that when you pay out this loan you will need to shell out big bucks to a lawyer so that they can achieve a transfer without triggering stamp duty or CGT. I mean wouldn't anyone in this situation think it would be a simple enough procedure given that there was no change in beneficial ownership? And why would you think that because it was a situation that was going to be years away that no one gave it any concern!

I think we all know that these instalment loans were not cheap to set up and now here's another expensive exercise just to achieve ownership. Sometimes I think I should have had a portfolio of instalment warrants pertaining to shares; a straightforward procedure without me having to shell out for all these hidden extras.

Anyway people be warned !
 
Thanks for that, but really how many of us who have been setup into these had been told that is what would occur at the end? The lawyers on here would no doubt say caveat emptor and you should have undertaken your due diligence, but really when you are seeking professional advice in the first place in setting these things up you rely on their superior knowledge in promoting these products that are going to be used to assist you in providing for your retirement.

There was no " by the way you do know that when you pay out this loan you will need to shell out big bucks to a lawyer so that they can achieve a transfer without triggering stamp duty or CGT. I mean wouldn't anyone in this situation think it would be a simple enough procedure given that there was no change in beneficial ownership? And why would you think that because it was a situation that was going to be years away that no one gave it any concern!

I think we all know that these instalment loans were not cheap to set up and now here's another expensive exercise just to achieve ownership. Sometimes I think I should have had a portfolio of instalment warrants pertaining to shares; a straightforward procedure without me having to shell out for all these hidden extras.

Anyway people be warned !

You are probably worrying unnecesarily. It probably won't be big bucks to change legal ownership.

Super is very complex and this is why it is essential that you have a lawyer for the legal aspects rather than rely on a fin planner solely. As a trustee or director of the trustee it is yur duty to seek appropriate advice and make sure the trust acts in conformity with the law. It is no good trying to blame someone else as ultimately you are responsible.
 
Thanks for that, but really how many of us who have been setup into these had been told that is what would occur at the end? The lawyers on here would no doubt say caveat emptor and you should have undertaken your due diligence, but really when you are seeking professional advice in the first place in setting these things up you rely on their superior knowledge in promoting these products that are going to be used to assist you in providing for your retirement.

There was no " by the way you do know that when you pay out this loan you will need to shell out big bucks to a lawyer so that they can achieve a transfer without triggering stamp duty or CGT. I mean wouldn't anyone in this situation think it would be a simple enough procedure given that there was no change in beneficial ownership? And why would you think that because it was a situation that was going to be years away that no one gave it any concern!

I think we all know that these instalment loans were not cheap to set up and now here's another expensive exercise just to achieve ownership. Sometimes I think I should have had a portfolio of instalment warrants pertaining to shares; a straightforward procedure without me having to shell out for all these hidden extras.

Anyway people be warned !

Hi Roomer, thanks for sharing your thoughts. I have posted a few times, they are a number of people involved in the transaction which is a property purchase, this usually includes:
- You
- Accountant (SMSF administrator)
- Lawyer to set up the deeds
- Financial planner (who may issue an SOA for up to $5k)....not required in my view
- Bank
- Conveyancer
and possibly a Property Group if they sourced the property.

During this process, the bank will not advise, they will usually ask for a 2 page certificated to be signed saying that you understand the structure.

- The conveyancer may have a lawyer involved during the contract of sale process
- the lawyer will draft the docs and SHOULD advise on your queries if you are engaging them direct and paying a fee, this should cover the consideration of what happens when you pay the loan off (and the accountant should advise on this also) and to avoid double stamp duty depending on your state
- The accountant will also assist you in understanding the structure and your responsibilities

Not sure if this happened with you when you entered the arrangement, but it should have and lets hope the above is happening with SMSF members entering into a LRBA, at least I can put my hand on my heart and say all my clients receive the right education on the structure.

Hope that helps.
Cheers,

Ivan
 
Ivan

I dont think Roomer is worried how to setup the structure. Sounds like he has and is in the enviable position of having paid off the property. He wants to know what now happens that the LRBA has come to an end.
 
Yes well I guess if it's not going to be the drama I thought it was, it would have been a good customer relation exercise for the bank (given they are the first one to know that the loan has been extinguished) to include in the "congratulations you've paid off your loan note" a paragraph about the need for one further step to be taken, and perhaps for them to provide that as fee for service "add on" to their business, given they are the ones ending up handing you the Cert of Title.

Anyway gentlemen I appreciate all of your comments. Maybe any bankers here might pick upon my idea as I think it's so very annoying to think that you have run a good race, breasted what you believe is the finishing line only to be told that it is not the end but there's another hurdle to jump over and that's located outside the stadium (and by the way there's is an additional race fee because of doing that extra leg) I guess you could say it's certainly not the bank going that extra mile it, it's all left up to you to fathom out...
 
This is not really the place of a bank to tell the customer that it may have to change title of a property. It is a legal issue and not the bank's business. They could offer it as a service through their lawyers, but they could do a lot of things which is outside core business.
 
SMSF - property exit strategy

Thanks Roomer for your post - raises some good questions about making sure you have an exit strategy for property within a SMSF - lots of advice out there about setting up and purchasing property within a SMSF not as much about selling property within a SMSF or transferring it from the Bare trust back to the SMSF.

I did find some useful related information under

http://www.thesmsfreview.com.au/smsf-technical-education-strategies.html

The 10 traps for SMSF and Trap #4 refers to stamp duty - at least it says the amount is "nominal".

Terry, any comments on this site and content within?

One question that I do have is if you still owe money on the property within your SMSF does the SMSF have to pay out the loan before the property is sold? Or can the Bare trust sell the property, payout the loan and then return the proceeds to the SMSF?
 
Thanks Roomer for your post - raises some good questions about making sure you have an exit strategy for property within a SMSF - lots of advice out there about setting up and purchasing property within a SMSF not as much about selling property within a SMSF or transferring it from the Bare trust back to the SMSF.

I did find some useful related information under

http://www.thesmsfreview.com.au/smsf-technical-education-strategies.html

The 10 traps for SMSF and Trap #4 refers to stamp duty - at least it says the amount is "nominal".

Terry, any comments on this site and content within?

One question that I do have is if you still owe money on the property within your SMSF does the SMSF have to pay out the loan before the property is sold? Or can the Bare trust sell the property, payout the loan and then return the proceeds to the SMSF?

I haven't seen that site before, but looks like it may have some good articles.

Duty is nominal -$50 I think - but only if the OSR's requirements are met to prove the Custodian was acting as Custodia for the SMSF.

In NSW there are various things needed, statutory declarations, proof SMSF provided deposit monies, deed stamped on initial purchase etc etc.
 
I haven't seen that site before, but looks like it may have some good articles.

Duty is nominal -$50 I think - but only if the OSR's requirements are met to prove the Custodian was acting as Custodia for the SMSF.

In NSW there are various things needed, statutory declarations, proof SMSF provided deposit monies, deed stamped on initial purchase etc etc.

SMSF Review is an awesome site, probably the leader in SMSF information followed by Super guide and of course the forums (which I recently discovered). Be free to advertise your services also there within the lawyer listings.
 
Add this to the list of things you should know before you borrow money to buy property in a SMSF. "Double stamp duty could result" is enough of a warning to me to understand up front what I need to do to avoid it. Roomer, this is a really useful thread.
 
Add this to the list of things you should know before you borrow money to buy property in a SMSF. "Double stamp duty could result" is enough of a warning to me to understand up front what I need to do to avoid it. Roomer, this is a really useful thread.

Roomer, I just noticed another post of yours from 4 years ago. It seems the accountant that advised you on this is the same one who tricked you into going with another lender so he got a commission - and this is after you signed docs.
 
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