smsf renting ip to relative?

can my smsf rent a place it buys to a relative of mine who is not a member of the fund? what conditions?

also, what are posters experiences dealing with lenders to smsf's? what lvr do they require? what guarantee's do lenders ask for?

thanks for your advice.
 
can my smsf rent a place it buys to a relative of mine who is not a member of the fund? what conditions?

.

A property which is subject to a leasing arrangement with a related party of the fund is regarded as an in-house asset of the fund.

This means that for the SMSF to be complying with legislation the value of the asset would have to not exceed 5 per cent of the fund’s total market value.

This 5% restriction would make it very difficult for SMSF trustees to acquire properties so leasing arrangements with relatives are to be avoided.

also, what are posters experiences dealing with lenders to smsf's? what lvr do they require? what guarantee's do lenders ask for?

LVR varies between lenders but the highest I know off is with STgeorge 72%
Some lenders ask for a personal guarantee but the wording is written in such way as not to upset the ATO. STGeorge is one of the few that don't ask for a guarantee but their lending interest rate is generally higher.

Finally, this is not advice
 
A property which is subject to a leasing arrangement with a related party of the fund is regarded as an in-house asset of the fund.

This means that for the SMSF to be complying with legislation the value of the asset would have to not exceed 5 per cent of the fund’s total market value.

This 5% restriction would make it very difficult for SMSF trustees to acquire properties so leasing arrangements with relatives are to be avoided.



LVR varies between lenders but the highest I know off is with STgeorge 72%
Some lenders ask for a personal guarantee but the wording is written in such way as not to upset the ATO. STGeorge is one of the few that don't ask for a guarantee but their lending interest rate is generally higher.

Finally, this is not advice

thanks for your (not)advice bv.

i certainly don't have 8m in super (based on 400k property) so i couldn't do it based on your info.

i wouldn't have a problem providing a personal guarantee, i guess. are ir's to smsf's any different than to oo's/investors?

ta
 
thanks for your (not)advice bv.

i certainly don't have 8m in super (based on 400k property) so i couldn't do it based on your info.

i wouldn't have a problem providing a personal guarantee, i guess. are ir's to smsf's any different than to oo's/investors?

ta

SMSF lending is a pretty straight forward deal to put together as long as the property trust deed and SMSF deed has been set up correctly. Both documents will be vetted by the banks panel solicitors.
The establishment fees are higher borrowing in a SMSF.
The banks would like to see that the SMSF can service the debt with the rent the property receives and with the regular superannuation contributions going in.
Guarantees from directors can be tied in if you can show that you have the ability to contribute more into your SMSF based on existing incomes.
If you sign a contract to purchase in your SMSF ensure you take at least 60 days to settle.
Resi 75% LVR standard for SMSF with the deals i've put through.
 
am not an accountant, a financial advisor or anything like that

i thought you were bv with the speed and depth of your reply!

nommy - thanks too
 
Or go directly to the bank.

the trouble talking directly to the bank is that their staff are going to be very green in this area so I'd go with an experienced broker.

It doesn't cost extra and you'll have support with any problems that come up.
 
the trouble talking directly to the bank is that their staff are going to be very green in this area so I'd go with an experienced broker.

It doesn't cost extra and you'll have support with any problems that come up.

thats why you need to ask the right questions. You will need to talk to commercial/business banking.
 
thats why you need to ask the right questions. You will need to talk to commercial/business banking.

If your looking to purchase residential property and go to a commercial/business banking unit you will end up paying more but if you don't mind neither do they.
 
Zaph,

Don't forget the business real property exception to in-house assets. Provided the asset falls within the definition of "business real property" in the SIS Act, and all the arms length and ancillary provisions are satisfied, you can rent the business real property to a related party of the fund. Note that "related party" is also defined in the SIS Act.
 
Zaph,

Don't forget the business real property exception to in-house assets. Provided the asset falls within the definition of "business real property" in the SIS Act, and all the arms length and ancillary provisions are satisfied, you can rent the business real property to a related party of the fund. Note that "related party" is also defined in the SIS Act.

huh? what does that mean? with a good accountant i could rent to my sister?
 
If your looking to purchase residential property and go to a commercial/business banking unit you will end up paying more but if you don't mind neither do they.

SMSF borrowings from my knowledge are structured as business facilities.
If you know financiers who will do a residential purchase under SMSF policy at standard consumer residential rates, fantastic!
 
SMSF borrowings from my knowledge are structured as business facilities.
If you know financiers who will do a residential purchase under SMSF policy at standard consumer residential rates, fantastic!

Nommy

Check out St George resi. Current rate is Standard resi variable rate BUT no discounts making it now 5.79%. NAB is similar rate but done through business centres.
 
huh? what does that mean? with a good accountant i could rent to my sister?
Zaph, actually, yes, you may be able to rent to your sister.

Of course, you would consider the definition of an "associate" under Part 8 of the SIS Act. Your sister would be an "associate", and therefore, a "related party", so you must see if the in-house asset rules will cause concerns for you.

Provided that the property is "business real property" as defined in the SIS Act, then look at section 71(1)(g) - which provides that it not an in-house asset if the superannuation fund has fewer than 5 members and the asset is real property subject to a lease, or to a lease arrangement enforceable by legal proceedings, between a trustee of the fund and a related party of the fund, if, throughout the term of the lease or lease arrangement, the property is business real property of the fund (within the meaning of subsection 66(5))".

Hope this helps you rent to your sister!!!

However, keep in mind section 109 - if you are not at arms length, you must act as if you are (well, on terms no less favourable). Obviously, rent and other lease conditions will need to be no less favourable than market conditions. Get some good advice from a solicitor and an accountant.

Hope this helps.
 
Last time I checked 65% on non-standard commercial was fine.
I can check with policy tomorrow at work and let you know if you want.

would appreciate that as am about to write an offer for a property off the plan and want to know I can actually settle on it.
 
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