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SMSF and Property

What properties a SMSF can buy?

A SMSF can purchase the following property related investments:

-          Residential property

-          Commercial property

-          Industrial property

-          Overseas property

-          Units in listed/unlisted property trusts

-          Property partnerships with non-related parties

-          Off-the-plan properties

-          Options to purchase off-the-plan properties

The SMSF can purchase a property with or without borrowed funds. When the SMSF borrows from bank or related parties, the loan must be limited recourse.

What properties a SMSF cannot buy:

A SMSF is unable to invest certain property investments that SISA does not allow:

-          Residential property from a related party

-          Property with full recourse loan

-          Property partnerships with related party

The acquisition of the above will breach the in-house asset rule and fail the sole purpose test, therefore they are prohibited by SISA.

What properties investments can transfer to a SMSF:

-          Commercial property

-          Industrial property

Note a residential property can only be bought by a SMSF. If it has been already bought outside of the SMSF, it cannot be transferred to the SMSF.

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