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Two’s company: using SMSFs to invest in property development

SMSF Advice Case Study

SMSFs to invest in property developmentBackground

Doctors Nicole and Steve were running a successful General Practice partnership. They each had an SMSF with a large amount of money invested.

Goal

Nicole and Steve wanted to use an SMSF structure to buy land and build a new clinic.

They didn’t have enough cash in their savings to buy property, but when pooled together they had enough in their SMSFs.

Process

Usually an SMSF would experience difficulty in borrowing for this type of development with traditional LRBAs. However, two unrelated SMSFs can invest in a unit trust that can borrow money to buy land and build property. When two SMSFs each own 50% of an asset, neither party has control over the asset which should allow compliance with the in-house asset rules.

There is no set limit to how much a unit trust can borrow; that’s up to the bank to decide.  Once the building was complete, we had to ensure that the medical business paid rent to the Super Funds via the unit trust at arm’s length rates.

Outcome

Nicole and Steve were able to build and own a state of the art GP clinic through their two SMSFs.

We’ve also seen plenty of accountants use a similar structure to buy or build business property through their SMSFs.


For advice on using SMSFs to invest in property development, or if this SMSF case study sparks ideas for other ways you can help your clients achieve their goals, give TriSuper Auditors a call on 02 4961 2788 or fill in the enquiry form on the right.

Contact Joel in the initial stages of an idea, so we can clarify the rules as they apply to your client’s situation.

Our role is to help you to provide wealth-creating and ATO-compliant SMSF advice for your clients.

For a confidential discussion, contact us today.

SMSF Accounting Awards 2017 Auditor of the Year

 

Joel Curry

Auditor of the Year (NSW)

SMSF & Accounting Awards 2017

 

 

 

This overview provides a summary only and shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The advice provided on this website is general advice only.