Can You Buy Off-the-Plan with SMSF?
Can You Buy Off-the-Plan with SMSF?
Are you considering buying an off-the-plan property with your self-managed super
fund (SMSF)? It’s a great way to invest in property and build your retirement
nest egg, but it’s important to understand the rules and regulations that apply
to SMSF investments.
In Australia, SMSFs are regulated by the Australian Taxation Office (ATO). The
ATO has strict rules about what SMSFs can and can’t invest in, and buying
off-the-plan property is one of the investments that is allowed. However, there
are a few things you need to know before you make the decision to invest in an
off-the-plan property with your SMSF.
What is an Off-the-Plan Property?
An off-the-plan property is a property that is being sold before it is built. It
is usually sold by a developer who is building the property. The buyer pays a
deposit and then pays the balance when the property is completed.
The main benefit of buying an off-the-plan property is that you can get a good
deal on the purchase price. The developer is usually willing to offer a discount
on the purchase price in order to attract buyers.
Can You Buy Off-the-Plan with SMSF?
Yes, you can buy an off-the-plan property with your SMSF. However, there are a
few rules and regulations that you need to be aware of.
Firstly, you need to make sure that the purchase meets the ATO’s ‘sole purpose
test’. This means that the purchase must be made for the sole purpose of
providing retirement benefits to the members of the SMSF.
You also need to make sure that the purchase is made at arm’s length. This means
that the purchase must be made at market value and not at a discounted price.
Finally, you need to make sure that the purchase is made in accordance with the
SMSF’s investment strategy. This means that the purchase must be in line with
the SMSF’s investment objectives and must be diversified.
It’s important to note that the ATO has strict rules about borrowing to purchase
an off-the-plan property with your SMSF. You can only borrow up to a maximum of
10% of the SMSF’s total assets.
It’s also important to note that the ATO has strict rules about the rental
income that can be earned from an off-the-plan property. The rental income must
be used to pay the loan and any other expenses associated with the property.
Finally, it’s important to remember that the ATO has strict rules about the sale
of an off-the-plan property. The sale must be made at market value and any
profits must be reinvested in the SMSF.
At Ello Lending, we understand that buying an off-the-plan property with your
SMSF can be a complex process. That’s why we’re here to help. Our experienced
team of mortgage brokers can help you to understand the rules and regulations
that apply to SMSF investments and can help you to get the best deal on your
home loan.
If you have any questions about buying an off-the-plan property with your SMSF,
please don’t hesitate to get in touch. We’d love to help you to get the best
deal on your home loan and to make your dream of owning an off-the-plan property
a reality.
