News

Wednesday, 18 December 2013 02:44

Investing in property through a super fund smsf

Written by 
Rate this item
(0 votes)

PROPERTY AND EQUITIES ARE THE MOST ATTRACTIVE ASSET CLASSES IN THE CURRENT ENVIRONMENT. 1 MILLION AUSTRALIANS, ABOUT 6 PER CENT OF THE POPULATION OWN AN INVESTMENT PROPERTY, NOT MUCH OF THIS IS HELD INSIDE A SELF MANAGED SUPERANNUATION FUND (SMSF).

 

The Australian residential property market has shown a 5.3 per cent annual growth in sales with a 4 per cent growth in the quarter ending August 2013. The historic low cash rate of 2.5 per cent has been evidently driving the current market statistics. However, other market statistics showed a 4.7 per cent fall last month in new home sales. This was the first decline since January 2013. Australian capital city dwelling values grew by 0.5 per cent in August 2013. This growth can be attributed to the increased affordability, rising demand from the increased population and decreased supply from credit-constrained property developers.

Investments in property can be made either directly through the purchase of specific buildings or structures, or indirectly through either listed or unlisted property trusts. Trusts are an effective investment vehicle for SMSF trustees who want to create a diversified property portfolio, because direct property investments require significant funds.

Direct

Indirect

Residential

Real estate investment trusts (REITs)

Commercial (business real property)         

Unlisted property trusts
Related party unit trust (reg 13.22C trust)
Unrelated unit trust (can be geared)

Direct property investment

Direct property investment is the direct purchase of specific properties by the trustee on behalf of the SMSF. The super fund has direct control of the asset. The fund receives rental or lease income and the fund is responsible for maintaining the property. The rental or lease agreement is between the super fund and the tenant. Direct property cannot be purchased from a related party unless it is classified as business real property (BRP). Related Party tenants are only allowed under the Superannuation Industry (Supervision) Act 1993 (SISA) if the property is business real property.

 

Residential Property

Commercial Property (BRP)

Buy within a SMSF

Yes

Yes

Rent it to a related party

No

Yes

Transfer existing property into SMSF

No

Yes

Property Development

Yes

Yes

Indirect property investment

SMSFs can invest in property indirectly either by purchasing units in an unlisted property trust or through Real Estate Investment Trusts (REITs).

Unlisted property trusts

An unlisted property trust is where a group of investors pool their money under a trust structure and the property is bought under the trust name. A SMSF can acquire units in a unit trust to acquire a share of a property indirectly. This strategy is commonly used where a SMSF has insufficient capital to acquire a direct property asset.

If the other unit holders of the trust are related to the trustees of the SMSF then the unit trust MUST be un-geared meaning there cannot be any borrowings within the trust and the underlying assets of the trust cannot be used as security for any borrowings. This is to comply with SISR 13.22C.

 

However, where each unit holder of the trust is unrelated or holds a 50 per cent or less interest in the trust, borrowing can occur within the Trust (and a charge taken over the property). This can create an opportunity for property development.

Read 446000 times Last modified on Thursday, 04 June 2015 01:15
Sinan Demir

Sinan graduated with a degree in Bachelor of Commerce, majoring in Accounting and Commercial Law, and is currently a fully qualified CPA.

Sinan has over 18 years of accounting experience, and has a wealth of knowledge in accounting and tax matters, relating to small to medium enterprises.

 

982 comments

  • Comment Link shudgegot Tuesday, 23 January 2018 10:11 posted by shudgegot

    cheap cialis online
    brand cialis online pharma
    http://gencialismedonlinemrx.com
    buy generic soft cialis
    generic cialis

  • Comment Link Online Payday Loan Tuesday, 23 January 2018 10:08 posted by Online Payday Loan

    installment loans installment loans for bad credit bad credit installment loans top rated payday loans

  • Comment Link Loan Cash Tuesday, 23 January 2018 10:07 posted by Loan Cash

    online loan online cash advance online loan online cash advance

  • Comment Link Loans Online Tuesday, 23 January 2018 09:56 posted by Loans Online

    payday loans no credit check payday instant loans payday loans online cash loans today

  • Comment Link JamesSak Tuesday, 23 January 2018 09:47 posted by JamesSak

    chat sex chat sex free webcam porn dildo show quick loans 100 approval direct lenders no credit check payday loans instant approval cash advance loan free web cam sluts free sex web cams sex chat web cam pussy best payday loans online payday loan direct lender easy payday loans online easy online payday loans easy online payday loans online payday advance loan payday loan no credit check easy online payday loans assignment solution help term paper write a paper student homework help online lenders same day payday loans online payday loans direct lenders only cash payday loans online primary homework help egypt primary homework help egypt research writing research paper advance payday loans advance payday loans no credit check payday loan advance payday loans advance payday loans the best online payday loans the best online payday loans small online payday loans

  • Comment Link Write Essay Online Tuesday, 23 January 2018 09:44 posted by Write Essay Online

    term paper term paper relief term paper in english buy a term paper

  • Comment Link Quick Loans Tuesday, 23 January 2018 09:30 posted by Quick Loans

    personal loans online personal loans online personal loans online best personal loans

  • Comment Link JaneSak Tuesday, 23 January 2018 09:28 posted by JaneSak

    loan application loan application online loan online loan

  • Comment Link Term Paper Writer Tuesday, 23 January 2018 08:46 posted by Term Paper Writer

    essay writers for cheap essay writer essay writers essay rewriter

  • Comment Link JosephNof Tuesday, 23 January 2018 08:32 posted by JosephNof

    Cover letter service uk math statistics coursework Research paper on slavery resume builders igcse math 1
    Respiratory system essay how write cv profile School safety essay custom paper coasters need help with essay paper
    Descriptive writing for college students gcse choices help Can i buy a essay online essay about yourself outline gcse syllabus
    Writing the argumentative essay medical research papers format Essay proofreader free writing a cv for medical school english literature coursework help
    Good introductory paragraph examples edexcel igcse physics revision guide Graduate essay paper creative writing essay scholarships research paper writers for hire
    School papers school papers writing research reports 4th grade Personal essay for mba admission resume outline resumes to get you the job

Leave a comment

Make sure you enter the (*) required information where indicated. HTML code is not allowed.

Complete the Challenge!
Protected by Joo EasyMath =

TOP