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Jean Rey

May 24, 2021

Can members over pension age lease their residential property to their daughter?

in SMSF Technical Forum

Hi SMSFAAA Team,

Could you please give me your opinion?

Background

The SMSF has 2 members. They are 71 & 68.
The fund has approx. $1M in it.
90% of the fund is in pension phase as they are both still working and making contributions each year

Question

Can the fund purchase a residential property and the member’s daughter live in it based on the fact that she is not a member and all members are over pension age and therefore have no restrictions to accessing their funds.

Thank you in advance.

Kind Regards

Jean Rey

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

May 24, 2021

Hi Jean

An in-house asset includes an investment or loan or lease to a related party. A Fund cannot have in-house assets greater than 5%.

Re the lease to a related party if the property is business real property there is an exception.

A related party includes a member of the Fund or a "Part 8 associate" of a member. This would include a relative of a member & that includes per SIS:

"relative" of an individual means the following:

(a) a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the individual or of his or her spouse;

(b) a spouse of the individual or of any other individual referred to in paragraph (a).

That is a daughter of a member is a related party & the Fund could not purchase a residential property and rent it to her (under the 5% in-house asset rules).

If they have full access to their superannuation they could withdraw the money & purchase the property in their personal names and rent it to their daughter.

Thanks

SMSF AAA