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SMSF owns a investment residential property, it has two members husband and wife, both under 40. Unfortunately, Husband passed away and wife wants transfer the property in her personal name and wind the smsf up in 2021 financial year. Questions: (1) Can she transfer the property from SMSF to her name (2) would stamp duty be applicable on the transfer? (3) Would CGT be applicable.
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Hi Dawoon
Yes a SMSF can transfer real property to a related party (as long as the SIS legislation is followed). As an example a SMSF can sell a residential property to a related party as long as it is done at market value. In relation to a death benefit a death benefit can be paid in cash or in-specie. That is on death the property could be transferred out to a beneficiary at market value. If the wife was a beneficiary and the value of the property was not greater than her deceased husband's balance then yes it could be transferred out to the wife as a death benefit (in-specie) payment.
In relation to the stamp duty this would depend on which state the property is in as stamp duty is a state based tax. My view is if it was Victoria there should be no stamp duty if paid out in-specie as there is no cash consideration and no change in beneficial ownership. The stamp duty question should be raised with a lawyer that has expertise in the relevant state.
In relation to the CGT question there is a disposal of the property so there would normally be CGT payable if the property had increased in value and there was no capital losses to offset against the gain.
Re the CGT could consider impact of wife receiving a death benefit pension for a period and then commuting the pension at a later date and then transferring the property in-specie.
Given the above issues the wife should get legal and tax advice in relation to the SMSF, the property & the death benefits.
Thanks
SMSF AAA