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Shalendra Pillay

Mar 30, 2021

PURCHASE RESIDENTIAL PROPERTY FROM MEMBER

in SMSF Technical Forum

Question from clients accountant. Member has 2 residential properties each has no of units and estimated total income for the year is $350,000.

The member wants to sell the properties to the SMSF at market value and has valuations from 3 independent valuers. Is it possible?

1 answer1 reply

Comments (2)

THE AUDITORS INSTITUTE

Mar 30, 2021

Hi Shalendra

A SMSF under section 66 of SIS cannot acquire assets from a member or relative.

There is an exception for:

1) listed shares,

2) business real property (BRP), and

3) units in ungeared unit trusts (that meet the requirements).

Normally residential property owned by a member would not meet the definition of BRP so it / they would not be able to be acquired by the Fund from a member or relative.

There are certain times where residential property meets the definition of BRP. Such an example could be where the member owns multiple properties and runs a leasing business due to the size & scale.

Please refer the ATO ruling that goes into this in more detail at:

https://www.ato.gov.au/law/view/document?DocID=SFR/SMSFR20091/NAT/ATO/00001&PiT=99991231235958

Please refer example 14 in this ruling as it gives an example where a person owns multiple residential properties and it is considered whether they would meet the definition of being business real property.

Thanks

SMSF AAA

Shalendra Pillay

Mar 30, 2021

Replying to

Thank you