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Dawood Hassan

May 01, 2024

Edited: May 02, 2024

tenants in common - two residential properties on a single title in NSW

in SMSF Technical Forum

Hello,

I hope everyone here is doing well. I am seeking guidance on the following issues:

A self-managed super fund (SMSF) is interested in purchasing a property from a non-related party with the following facts:

Two properties are located on a single title. The SMSF would purchase one of the properties under Tenants in Common.
The SMSF will pay for the property with its own funds, which it holds in a bank account.

I've read a few questions asked earlier in this forum, and I understand that an SMSF is allowed to invest in a property held in Tenants in Common. My queries are as follows:

Can an SMSF have a non-related party as a tenant in common?
What if the other party decides to get a loan against their share of the property? Would it be a breach for the SMSF since both properties are registered under one title, and a title search would show a charge against the property?
Can a Limited Recourse Borrowing Arrangement (LRBA) be used to buy a property with a Tenants in Common arrangement?

Your guidance on these matters would be appreciated.

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