Self Managed Superannuation Fund (SMSF) and furnished apartments or holiday homes.
SMSF’s are allowed to borrow to purchase an investment property within their Superannuation Fund as long as they adhere to the provisions of Sect. 67A of the SIS Act.
One of the many requirements of Section 67A (i) (a) is that the superannuation fund is permitted to acquire a single acquirable asset.
An apartment, home unit, house are all “single acquirable assets” but what about a property that is purchased which includes a furniture package similar to a holiday home. If the furniture is purchased with the property it would not be a single acquirable asset, as it is building and furniture.
What about if there are two separate loans, one for the apartment and one for the furniture. Well again it could be argued that the furniture pieces are not single acquirable assets, but a number of small individual assets.
It is extremely important that the financial planner, and the tax adviser and conveyancing solicitor work very closely on this to ensure that it is structured so that the SIS Act is not breached and the SMSF does not become non compliant and taxed at 45% on the value of the assets in the fund.
There are a number of potential solutions to this issue but it will very much depend on each client’s individual circumstances.
To assist in formulating an appropriate investment strategy for your SMSF, please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.