Self Managed Super Funds – Think outside the box
2. Worth under $6m (net business assets) or $2m turnover?
3. Interest in property to a maximum value of the maximum concessional contribution?
4. ‘Business’ property?
A Self-Managed Super fund is a like a day old baby; it needs a lot of love, care and attention. It can also bring a lot of joy, which can be enhanced through talking with your accountant and adviser about what you can do with this wonderful vehicle.
I am going to look at how some of the aspects above can be utilized to boost your SMSF:
1. Turning residential property into ‘business’ property
The property is your family home. It is worth $2m. It is free of CGT as it is your principal residence. You transfer ½ the family home to your wife, for no CGT and use the stamp duty exemption to avoid transfer duty. You then bulldoze the home and start renting out the property as a commercial car park. You then each transfer the $1m interest into your SMSF.
2. Transferring a $5m property into your SMSF
You have some business property. (You don’t need to be running your business out of the property – it just needs to be ‘commercial’; an empty factory is fine, as is a commercial office block which has third parties leasing it). The business property is worth the maximum concessional contribution. It is too big an amount to transfer into your SMSF. Never mind. Merely transfer an interest of $1.395m into your Super this year (This may be a 28.5% interest in the property, for example). In the ensuring years, drip feed the rest of the property into your SMSF. You don’t need (and should not have) any ongoing agreements with your SMSF. Don’t put in place any options to purchase or put/call agreements. Any such agreement may trigger stamp duty and CGT!
3. Updating your SMSF Deed
Some strategies take many years to put in place. Make a time to see your accountant and financial planner and have a 5 and 10-year plan in place. However, keeping your SMSF deed up-to-date is a continuous good practice duty. Only through your accountant or adviser I will review your Super Deed for free. A business property that dominates your SMSF’s assets can make it ‘lumpy’. When retirement comes around for a member it is generally not possible to sell a bit of the commercial property. Review and amend your SMSF’s investment strategies by talking about this issue with your advisers.