SMSF - Unit

J

johncan

New Member
Hi,

looking for a little advice.
Is it allowable to purchase a Holiday unit with a SMSF?

If so would you have to pay "rent" when you wanted to use it?

Thanks for the advice
 
You are on risky ground there. You are (in most cases) not able to receive benefit from you SMSF.

Although you would be paying rent it is not something the ATO looks on favourably.

Similarly your SMSF cant buy your own house and rent it back to you - although this may come if property prices come down enough
 
1. You are allowed to buy the unit.
2. You can only overnight there if performing maintenance.
3. You can only rent it as a business, for business purposes.
 
openeyes said:
Sounds like a very run down unit that will require a lot of maintenance!
Click to expand...

I am not an ATO agent, but if I was, this is exactly the sort of thing I would be on the look out for.

I think you can also claim travel expenses once a year to inspect the property.
 
AngloSaxon said:
smk762 said:
3. You can only rent it as a business, for business purposes.
Click to expand...

Can't run a business out of a SMSF - has to be for investment purposes. Difference.
Click to expand...

Unless it is a motel, farm or commercial property leased back to the trustees?
 
AngloSaxon said:
smk762 said:
3. You can only rent it as a business, for business purposes.
Click to expand...

Can't run a business out of a SMSF - has to be for investment purposes. Difference.
Click to expand...

To clarify, I meant the property would be leased to your business (i.e. your company pays your SMSF rent). The SMSF does not own the company, it just enters into a contract with it.
 
mmm....shiney! said:
AngloSaxon said:
smk762 said:
3. You can only rent it as a business, for business purposes.
Click to expand...

Can't run a business out of a SMSF - has to be for investment purposes. Difference.
Click to expand...

Unless it is a motel, farm or commercial property leased back to the trustees?
Click to expand...

I believe the trustees would have to be operating the motel etc as a business under a separate and unrelated company. The fact the directors of that company, the trustees and the super fund members are all the same people is not an issue.
 
It's what I understand it to be as well. Except that the "unrelated" company can be the actual SMSF beneficiaries as long as the business entity is in a different name and pays taxes as such.
 
mmm....shiney! said:
It's what I understand it to be as well. Except that the "unrelated" company can be the actual SMSF beneficiaries as long as the business entity is in a different name and pays taxes as such.
Click to expand...

Me too, it's what I believe Nonrecourse was doing.
 
Although i do believe that you can buy an investment property that you will eventually retire too. Once you have entered retirement the property transfers out of the SMSF to the owner and no capital gains will be paid. Thus allowing to buy a ppty by the beach now and reap the rewards of capital gains over the years if you buy right
 
aussiesilver said:
Although i do believe that you can buy an investment property that you will eventually retire too. Once you have entered retirement the property transfers out of the SMSF to the owner and no capital gains will be paid. Thus allowing to buy a ppty by the beach now and reap the rewards of capital gains over the years if you buy right
Click to expand...

Really? Is it as simple as that?
 
johncan said:
Hi,

looking for a little advice.
Is it allowable to purchase a Holiday unit with a SMSF?

If so would you have to pay "rent" when you wanted to use it?

Thanks for the advice
Click to expand...

Hi Johncan,

I currently own the Management Rights of an apartment complex and almost half of my letting pool are owned by Individual SMSFs.

If an Owner whether an SMSF or not wants to stay in their apartment the industry practice is to block the stay out to "Maintenance" so that it does not affect the Management Rights Owners occupancy/average rate or revenue per available apartment as this would affect our calculations when we decide to sell.

No nightly tariff is charged to owners however a cleaning and linen charge debited from your income is the industry standard.

My SMSF Owners rarely stay however it would be difficult for the ATO to trace these stays and our Trust Accounting/Reservation Systems are governed by the OFT.

:)
 
smk762 said:
To clarify, I meant the property would be leased to your business (i.e. your company pays your SMSF rent). The SMSF does not own the company, it just enters into a contract with it.
Click to expand...

In this case you are fine.
I have had this confirmed by a SMSF auditor, and it is fine because as they said "business is business", but only if you pay the "going market rate". This is the only way you (or any of your relatives) can technically use a SMSF owned property.
It must be a proper Pty Ltd company, no sole traders or partnerships allowed.
 
mmm....shiney! said:
aussiesilver said:
Although i do believe that you can buy an investment property that you will eventually retire too. Once you have entered retirement the property transfers out of the SMSF to the owner and no capital gains will be paid. Thus allowing to buy a ppty by the beach now and reap the rewards of capital gains over the years if you buy right
Click to expand...
Really? Is it as simple as that?
Click to expand...

I don't think so. My accountant said you pay a reduced amount of CGT, not zero.
The main reason this is a not a good idea is that you have no idea what your circumstances will be come retirement time, hence no real idea where you'll be living.
 
Stacked said:
johncan said:
Hi,

looking for a little advice.
Is it allowable to purchase a Holiday unit with a SMSF?

If so would you have to pay "rent" when you wanted to use it?

Thanks for the advice
Click to expand...

Hi Johncan,

I currently own the Management Rights of an apartment complex and almost half of my letting pool are owned by Individual SMSFs.

If an Owner whether an SMSF or not wants to stay in their apartment the industry practice is to block the stay out to "Maintenance" so that it does not affect the Management Rights Owners occupancy/average rate or revenue per available apartment as this would affect our calculations when we decide to sell.

No nightly tariff is charged to owners however a cleaning and linen charge debited from your income is the industry standard.

My SMSF Owners rarely stay however it would be difficult for the ATO to trace these stays and our Trust Accounting/Reservation Systems are governed by the OFT.

:)
Click to expand...

Thanks heaps for the info guys. Just some more food for thought.
 
You must log in or register to reply here.
Back
Top