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?
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?
Interest rates are generally higher than the discounted rates we get outside super.
There are several lenders out there so when you are ready to proceed get a mortgage broker to give you a summary of the lending options.
We bought our first property in our SMSF recently
check out the process
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.
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.
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!
Zaph, actually, yes, you may be able to rent to your sister.huh? what does that mean? with a good accountant i could rent to my sister?