hi Bud
Property devlopment within an SMSF breaches so many rules its not funny.
You can't even purchase vacant land with an SMSF let alone progressively build on it. See a good accountant and they will set you straight.
Mike is 110% correct.
You cannot construct - improve - develop whilst the asset is a 'SMSF asset'.
If a block of land is already within the SMSF - too bad I am afraid.
The ATO Taxpayer alert 2008/05 states that:-
Trustees are also reminded that existing fund assets cannot be placed into a limited recourse borrowing without breaching the SIS regulatory requirements.
(see below link)
http://law.ato.gov.au/atolaw/view.ht...ion funds;
I have settled a couple of loans whereas the individuals purchase the land - construct then sell to the property to the property trustee (SMSF is the beneficial owner).
The contract of sale was drawn up between the individual and property trustee pre-construction so additional transfer duty payable only on land value.
Obviously many consideratons here, however if this is truly a long term strategy, then I believe it is a case of 'short term pain for long term gain'.
Cheers.