| Real Estate & Self Managed Superannuation Funds |
| As a trustee of a Self Managed Superannuation Fund (SMSF), you have a wide choice of investments
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You have the flexibility to make investments when you wish, subject to the fund?s investment strategy and the legislation. Real estate is one asset class that is very suitable for the SMSF and provide good returns.
A SMSF can purchase property directly. It can also invest indirectly in a property unit trust or in a company that owns substantial property. What is fundamental is whether the property is a sensible investment and whether there are any restrictions imposed by legislation.
If it is in accordance with the investment strategy then it will be a sensible investment. This assumes, that the investment strategy has been properly formulated ? certainly not a one or two line statement. Your accountant or financial planner can advise on the necessary considerations.
SMSF legislation restricts the type of real estate that can be acquired from a ?related party?. Related parties include fund members, trustees of the fund or their relatives or any entity that is controlled by the trustee or member of the fund of their relatives. However, the good news is that these restrictions do not apply if the real estate is used in a related business.
A property owned by SMSF can never be mortgaged because the fund should not ever borrow (except to pay out member entitlements).
This structure provides an opportunity for businesses to generate additional owner wealth and create growth assets in a tax preferred environment.
24th-February-2004 |
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