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Transferring property into a SMSF

You can currently transfer the ownership of some types of property directly into your Self Managed Superannuation Fund (SMSF). They are:

  • Business real property (used exclusively for the running of a business), for example a warehouse you conduct your business from;
  • Listed securities (such as shares in companies listed on the stock exchange);
  • In-house assets, for example an investment in a related party – provided that the market value of the in- house assets will not exceed 5 per cent of the total market value of assets held by the fund; and
  • Investments in managed funds, provided the managed fund held is a unit trust (your Chartered Accountant can check this for you).

This is known as an ‘off-market transfer’ and ‘in specie contribution’, and the value of the property transferred will be counted as a contribution into your SMSF. No actual cash payments will need to be made.

The Government believes that

‘off-market transfers’ are open to abuse by manipulation of the asset value and/or transaction dates, and has committed to the implementation of new rules. They include:

  • Listed securities and investments in widely held unit trusts will need to be sold on the open market, attracting brokerage and any other transaction costs.

You can then either:

o repurchase the listed securities before contributing them in specie into the fund; or

o contribute the cash proceeds into your SMSF and the SMSF can then use the proceeds to re-purchase the equivalent listed securities on the open market, or any alternative investments in line with your SMSF investment strategy.

In either case, you or your fund will have to pay brokerage, or any other transaction costs, on the purchase.

  • Business real property and unlisted shares, which do not have an underlying market will need to be supported by a valuation from a qualified independent valuer.

Such valuations can be significantly more expensive than a real estate appraisal from your local real estate agent.

If you think you might be affected, please check with us now, for advice about your general financial position, tax implications and investment strategy.

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