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Need to Know Info - Self Managed Super Fund Property Purchases

Are you considering buying property with your self managed super fund, or have you already made the purchase? Whether you are still in the consideration stage, or have already bought, an Ascendia SMSF property lawyer can check over all particulars to ensure legal compliancy is met when buying real estate with super.

Why should you have Ascendia Audit your SMSF Property 

Routinely, our SMSF property solicitors are asked by clients to review work undertaken by other professionals in relation to properties owned in superannuation funds.

Surprisingly, a decent percentage of these properties are incorrectly held or there are errors in the ownership, which may result in a notice of non–compliance being issued upon the annual audit of the fund.

The acquisition of a property into a superannuation fund is a very specific area in which any professional advisor needs knowledge of both property law and conveyancing as well as knowledge of the restrictions placed on the superannuation fund in their ownership of the property.

Common Problems to Avoid when Buying Property with Superannuation

Some common problems that we have found include:

1.     Ownership in the wrong legal entity

The property must be owned by the correct entity in the correct capacity. If you require borrowings or finance in order to undertake the purchase, then the property cannot be held in the name of the superannuation fund. There must be a Bare Trust in place and the Bare Trustee holds the property on behalf of the superannuation fund.

The property cannot be held in the name of the superannuation fund with a mortgage registered on the title to the property. This is a very common error and a costly one when you are then required to transfer the property to the correct entity to avoid significant penalties in your superannuation fund. This may mean payment of stamp duty on the full value of the property in order to correct the error.

2.     A lack of consideration of the purpose of the purchase

We have come across people who purchased property in their superannuation fund with the intent to develop or renovate the property and to use finance to do so.

This is not able to be undertaken under the current legislation and may mean that if the reason for your purchase is not properly considered by your professional advisor, you are left with a property which is not able to be used for that purpose.

A further example is that we routinely receive enquiries from clients keen on buying property through self managed super funds, either for themselves, or for family to live in, on a residential basis. Again, this is not allowed under the current rules and may result in a contravention notice being issued against your fund, with associated penalties.

3.     Incorrectly prepared Bare Trust Deeds

We have also come across many Bare Trust Deeds, which were not prepared correctly by the professional advisor and do not comply with the ownership requirements. Unfortunately, this means both time and money must be spent in order to rectify this issue in order to ensure that your fund remains compliant.

For expert help buying property with superannuation, contact Ascendia. Our self managed superannuation property lawyers can provide guidance on the legalities involved, and advise you on everything you can and can't do when buying real estate with SMSF. Our lawyers will conduct a comprehensive audit of your self managaed super fund property as part of this process. 

Why Choose Ascendia for Superannuation (SMSF) Property Investment & Conveyancing

Many times we come across the wrong names listed on the Contract for Sale of the property owned by a Superannuation Fund (SMSF).

For example, in one case, neither solicitor nor the bank noticed the error until the fund was audited by the accountants. Unfortunately, by this stage, the error was not able to be rectified quickly or cheaply for the client and they needed to undertake significant and protracted action in order to correct the error and prevent the client suffering substantial economic loss.

Don’t put your superannuation and retirement lifestyle at risk by using property or legal professionals who are not appropriately experienced in the superannuation transactional area.

The team at Ascendia includes lawyers, accountants and superannuation experts who work in concert to ensure that your superannuation fund is both legal and compliant, and will allow for a stress free annual audit of your fund and no future financial headaches.

Getting the purchase or sale of a property when a superannuation fund is involved - is very important - due to the gravity of the consequences of getting it wrong.

Some of the consequences of getting self managed super fund property purchases wrong are:

  • Being obligated to pay stamp duty twice at purchase
  • Losing the sale or purchase
  • Being obligated to pay stamp duty on the pay out of the mortgage
  • The Superannuation Fund being deemed by the Auditor or the ATO as a Non-Compliant super fund - which an incorrectly owned property can cause - can result in the loss of up to nearly half of the value of the fund (not just the property asset)
  • Being forced by the ATO to sell property incorrectly held by the SMSF at a time not of your choosing and to rollover all proceeds out of your super fund into a retail fund.


Contact our SMSF Property Solicitors

Before buying property with self managed super funds, talk to our SMSF property solicitors. They can check over all the particulars to ensure your purchase decision is 100% legally above board and compliant with the law.

On a similar note, if you have already made a superannuation property purchase and already own real estate under your superannuation, our SMSF property lawyers can conduct a post-purchase SMSF property audit. 

Contact your closest Ascendia office. We are located in North Lakes, Maroochydore and Noosa. 

We're here when you need us.

To request an appointment with an Accounting, Law or Investment Client Service Manager, please fill out the form or Call: 1300 797 858.

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