SMSFs

[mandimoo]

Hi again,

How do SMSFs work in relation to property? Do you have to have enough in there for the entire purchase amount? Are there restrictions saying that you cannot live in the property after you retire?

My in-laws want to move when they retire, but I predict a lot of baby boomers doing the same thing at the same time and property prices increasing in that area. Any information would be great

 

[mandimoo]

So technically do they have to sell it when they would normally withdraw their supperannuation or do they have to just not live in it while their super is paying for it?
Do they make the repayments by contributing extra from their pre-tax income into their super?

 

[mandimoo]

Okay, somewhat confusing, so the SMSF must sell it, can they buy it from their SMSF and do they have to pay market value? Confusing given that they would have to pay more and receive more at the same time.

 

[Player]

By my understanding, they may take it as a (pension amount) lump sum CGT exempt once they are of retirement age according to the SIS rules, trust deed and the act applicable at that time......the govt is changing the rules every day.

They may live in it once they are retired. Careful if one is of retirement age and the other is not and if it is the only asset in the SMSF

Not sure if stamp duty is payable. They cannot live in it prior to that as it is a SMSF asset

 

[mandimoo]

They are both in their mid 50's, one is retired and the other will keep working probably for another 10 years, his super fund would be the biggest as he has worked full time so his would probably fund it. They wouldnt make the move until after he retires as his work is around the city. This could work yeah?

 

[Terry_w]

A member or related party cannot live in a residential house owned by a SMSF - breach of in house asset rules, s71 SIS Act.

The fund would have to sell the house to the individuals. It could be CGT exempt at this stage if the fund is in pension mode. Possibly stamp duty exempt depending on a lot of circumstances too.