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Dipak Mehta

Nov 24, 2023

A residential property purchased as tenants in common by Individual trustees and the SMSF (43% and 57% respectively)

in SMSF Technical Forum

Dear Expert Team

A residentail property purchased as tenants in common by the individual trustees (individually not through smsf) and the SMSF (through trustee company). There is no borrowing. SMSF owns 57% and Individual trustees own 43%.

Is the above transaction allowed without breaching any provisions of the SIS Act and SIS regulations?

Tenants are not related parties and rent received by smsf proportionately.

Please advise on the above.

Thank you so much for your time.

Kind regards,

Dipak Mehta

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Nov 26, 2023

Hi Dipak

A SMSF is allowed to invest in a residential (or business real) property as tenats in common with a related party. That is a SMSF can own property jointly with a related party. The normal rules apply in that it cannot be acquired from a related party unless it is business real property.

SIS gives guidance at Section 71(1)(j) that states that an in-house asset does not include

"property owned by the superannuation fund and a related party as tenants in common, other than property subject to a lease or lease arrangement between a trustee of the fund and a related party".

An article that addresses the issue of tenants in common (TIC) investments and having a TIC agreement in place can be found at:

Thanks

The Auditors Institute.