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SMSF Updates

Can an SMSF purchases a residential property with member’s partner?

21 Feb, 2019

An SMSF trustee can buy an investment residential property using tenancy in common or partnership structure.

However, the following are issues associated with this transaction:

1.  Member is unable to live in property whilst an asset of the fund.

2. The member can receive an inspecie lump sum (being property) after meeting a condition of release ie. Full retirement or 65.

3. The transfer from SMSF to members name may be subject to stamp duty.

4. Tenancy in common arrangements are fine but all property income and expense need to be split. SMSF cannot pay partner’s share.  Partner cannot finance his/her share using property as security for loan.

5. Partner is a related party who cannot live in it until asset transferred out of SMSF.

6. SMSF cannot borrow for only portion ownership because it must be a single acquirable asset.

If your SMSF would like to buy an investment property in a partnership, please contact us before signing the contract and we will advise you how to comply with the SIS Act to avoid future compliance issues.

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