Want to now live in IP bought using SMSF

I've searched & searched but can't find my answer.

Can someone please direct me, or advise how the following is possible (I'm sure it's possible!)

- Friend sold part of business, put funds into SMSF, bought property on the river with house
- Wants to retire soon & live in it eventually (couple of years)
- How can he possibly do it without having to buy it back off the SMSF?

Cheers
 
Propertunity is correct.

Your friend must be very careful and get good advice. I am not sure if he can buy it off the SMSF but I very much doubt it. If he breaches regulations the fines are very serious.
Marg
 
Yes, maybe at Market price it can be purchased; maybe if they have reached 60 it could be transferred over, but dont do anything until an Accountant and maybe even an auditor too, has checked it out.
 
I've never been too keen on his accountant but looks like he's right. I'm trying to get more opinions. He didn't think far enough ahead to buy it in the right structure.

Property has mangoes & other fruit on it. Could he refinance so the fruit is within the SMSF 'area' and live in the separate residential area of the property? Subdivide?

Hmmmmmmmm
 
Kath

Like others said, you cannot occupy a residential property.

If a member of the SMSF occupies the property and the ATO finds out ;)
the “in-house asset rule” is breached and there are penalties involved
(loss of favourable tax rates and imprisoment come to mind :eek:).

However, the SMSF can buy a property that the investor intends to live in after retirement but the property will have to be transfered from the SMSF to the individual before it can be occupied by the investor.
 
Property has mangoes & other fruit on it. Could he refinance so the fruit is within the SMSF 'area' and live in the separate residential area of the property? Subdivide?

Hmmmmmmmm

He could, but a SMSF is meant to provide for our retirement
and there is not a lot of benefit in keeping a block of land which only produces mangos.

However, this restriction is not of great benefit to the ATO so I'm suspecting that it could be eased later on if the retiree has other assets and/or additional income streams.
 
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Well all that kind of sux doesn't it...

What share obsessed w**nkers came up with the rules...Oh no you could not possibly make money with property. You must "try" and make a profit on the stock market only and THEN attempt to buy your dream retirement home.
 
Well all that kind of sux doesn't it...

What share obsessed w**nkers came up with the rules...Oh no you could not possibly make money with property. You must "try" and make a profit on the stock market only and THEN attempt to buy your dream retirement home.

they aren't saying you can't make money with property, only that you can't live in it - it is an investment.
 
Well all that kind of sux doesn't it...

What share obsessed w**nkers came up with the rules...Oh no you could not possibly make money with property. You must "try" and make a profit on the stock market only and THEN attempt to buy your dream retirement home.

Why? I think it's fair. An investment isn't something you live in. It's something that makes you money. The whole idea is to sell it off when you retire, CGT free, then use that money to go buy your dream property. Or... buy your dream property now, then use the proceeds of the sale of SMSF property to reduce the mortgage... food for thought.
 
. The whole idea is to sell it off when you retire, CGT free, then use that money to go buy your dream property.

So are you syaing that you any property bought within smsf is cgt free?? I did not realise that...I thought you paid 15% (surprisingly the same amount as CGT) when you drew down super funds??

what I am (naively) saying is that shares are not the only way to make $$ out of super.

savoys said:
they aren't saying you can't make money with property, only that you can't live in it - it is an investment

What is the difference with buying $200K in the "approved" stockmarket or buying a $200k house that (as in the OP) you might want to live in.
:eek: Gosh in a few years the home "may" be worth more than the shares...
 
So are you syaing that you any property bought within smsf is cgt free?? I did not realise that...I thought you paid 15% (surprisingly the same amount as CGT) when you drew down super funds??

Yes, but only when sold during "pension" phase, ie, when you retire.


moyjos said:
What is the difference with buying $200K in the "approved" stockmarket or buying a $200k house that (as in the OP) you might want to live in.
:eek: Gosh in a few years the home "may" be worth more than the shares...

Shares are an investment and a house is personal.
 
Thanks everyone.

He didn't expect he'd be retired by 50. 'Spose there's worse things in life!

He's very old fashioned & by the book so he'll always follow the rules.

With the "arms length" rules, once he sells the rest of the business, he'll still work for them, can't one of his companies or the employer pay rent for him to live in the house? Bit mesy, but ie :

Jeff SMSF owns river house

Jeff self employed by Company Pty Ltd that contracts to Business Pty Ltd.

Business Pty Ltd pays rent as a package or as a 'staff house / accommodation'

He's so disappointed he can't live there when he really wants to. Dream home kinda stuff. I'd be gutted! I'm only enquiring because I care & he's the kinda guy who holds his accountant as gospel. Much like he'd only go to his Doctor for advice, never getting a second opinion. I'll just leave it alone after this post...................Cheers
 
Kath

From my interpertation of the rules he can't do it.
He can't legaly live there while the property is owned by the SMSF, however, nothing stops him from selling it to himself.

But if he's going to have a mortgage on it, he should transfer it in his name before retirement because without a job he could have difficulties obtaining finance.

Don't worry, his accountant knows the rules and together with the SMSF auditor they'll be able to give him the right advice.
 
You can buy a block of land in the SMSF if your investment strategy considers it will have future Capital Gains. We did that and later sold it after 4 years for 120% profit.
 
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