What would you do?

I have a retail/resi premise in which I have a 1/4 share with siblings. As I am now over 60 I wondered about setting up a SMSF and selling my share (tenants in common) to it. When I declare myself fully retired earnings would be tax free. My share would be about $400k. Would it be worth the initial and continuing expense to bother doing this? I could transfer money, say $100k which is in my current industry super fund into the fund as well. I would also be in a position to make a non concessional contribution of $180k to bolster the balance.
Thoughts?
 
I think you may have issues selling a resi property you already own to your smsf..

I've done it for commercial factories when owner builder but residential may be a problem.

I may be wrong..
 
I've been told I cannot move a property that I have an interest in to a SMSF (not even moving one from my late father's name into a SMSF). Your question seems to be the same as mine was.
 
I have a retail/resi premise in which I have a 1/4 share with siblings. As I am now over 60 I wondered about setting up a SMSF and selling my share (tenants in common) to it. When I declare myself fully retired earnings would be tax free. My share would be about $400k. Would it be worth the initial and continuing expense to bother doing this? I could transfer money, say $100k which is in my current industry super fund into the fund as well. I would also be in a position to make a non concessional contribution of $180k to bolster the balance.
Thoughts?


1. s66(2) of SIS Act permits only business real property to be acquired from an associate" or member. The mixed use of the property needs to be evaluated.

2. You propose a bank loan to do this? The LVR wont work. The SMSF would need to fund the duty, legals, structure costs, advice etc. THEN the bank may lend between 60%-70% LVR as its commercial property.

A Non concessional contribution under the bring fwd rule may work but would need advice as the penalties can be huge and there can be many catches. See 3. below.

Then stamp duty issues may need to be considered. I don't believe it would be exempt in NSW as it may not satisfy the exemption.

3. Pension problems will occur later. How can a fund pay a 4-5% pension if its sole source of income is 5% yield rent and costs impact the fund ? Illiquid assets in pension phase can be very limiting. Even simple matters like death benefits can pose a problem so appropriate estate strategies need to be considered before acting. You don't want to die and the fund is forced to transfer the property to your spouse / estate.

You should seek personal financial + smsf strategy advice.
 
No loans involved.
The building is combined resi and retail but majority of income is from the retail side.
Forgot about the arm's length rule. Would this also apply to purchasing another sibling's share by my SMSF?
 
I didn't mention arms length as that goes without saying. s66 is the general prohibition which stops any super fund from acquiring an asset from a member, relative or an associate unless s66 permits it. s66(2) allows listed shares and real business property. Thus resi is excluded.

Business Real property has a "wholly and exclusively" test which is a bit rubbery. Its often difficult for mixed retail / resi to satisfy this test.

Read more here https://www.ato.gov.au/super/self-m...ctions-on-investments/business-real-property/

Tip : Don't watch the video. Its appalling. Read the tax ruling though.
 
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