I am just about to sign a contract for an IP in Qld, need legal person to prepare 'bare trust' for property to be secured outside SMSF before I sign. I alreadty have an IP held by my SMSF and have already had a Trust Deed prepared and signed off by NAB from the previous property purchase earlier this year. The NAB have indicated they will accept identical deed (wording etc..) for the new property.
I require new bare trust set up using same Trusteee (as first property). Any quotations welcome,
Regards
Tim,
(I have no pearls of wisdom)
Tim
You mention "outside SMSF" do you mean inside?
If your doing the same funding structure and same lender as your past SMSF purchase why not just copy what you have already paid for using the same bare trustee company/entity but changing items such as address/loan amount etc.
You are probably 100% correct… common sense says thats what I could do. I am not that brave just in case I stuff it up. SMSF lending is very tricky (so I have found out). The bank asked for original 'bare trust' certified from legal . Admittedly it was the first time, so 2nd time round the same requirement may not be required… I haven't approached them on that front.
I'm not confident in doing it without legal sign off …
Regards
Tim
(I have no pearls of wisdom)
Sorry just relaised I didn't answer you question.
I am setting up a loan to have the property held 'outside' SMSF being held in trust for the SMSF, until final payment made on the loan, then the property can be moved into the SMSF.
regards
Hey guys what is the tax advantages with IP in SMSF? is it the same as personal as in write off visits to the property for inspections?
Does the income from the property count towards my contributions as i am currently at limit?
Regards
Ash
Tim
Your structure seems to be standard “instalment warrant” structure so all should be OK. Only warning is that although you have already been through NAB’s legal vetting process in the past it in no way means that you will get the same successful result again even using the same documentation as you have in the past.
As an example I know of one professional document provider that has done probably hundreds of bare trust documents for NAB on behalf of borrowers & their advisors but continually comes up against requests by NAB’s internal legal people to make further changes not withstanding that their documents have been successfully accepted previously.
My personal experience with NAB for SMSF loans is that there is from time to time no consistency with some of their processes.
what would you expect to pay someone to set up a Bare Trust and whatever is involved to buy a property in a SMSF?
Ash7261 wrote:Hey guys what is the tax advantages with IP in SMSF? is it the same as personal as in write off visits to the property for inspections?Does the income from the property count towards my contributions as i am currently at limit?
Regards
Ash
hi Ash
In simple terms contributions are taxed at 15% and the capital gains tax applicable when the property is sold is either 10% if you sell whilst you are contributing or Nil when you are in pension phase.
Rental income like investment earnings are also taxed at 15% .
If the property is negatively geared losses are trapped and can only be applied against future income derived by the fund ie can not set off against your own personal income.
In answer to your last question rent received does not count as a contribution.
Ash7261 wrote:what would you expect to pay someone to set up a Bare Trust and whatever is involved to buy a property in a SMSF?Ash
On top of SMSF establishment/set up costs and ongoing costs such as audit, a Bare Trust arrangement will cost you approx $1,000 – $2,000 depending on who you choose.
Borrowing costs/fees can be anywhere from $3,000-$4,000 upwards depending on the lender/loan amount and cover such things as Application/Approval, mortgage stamp duty, lender legal trust deed vetting costs, independent financial sign-off .
You will also need to have a reasonable amount of cash in your fund with most residential lenders looking to lend only up to a max 70%-72%.Whilst there a couple of lenders that do go to 80% their terms/conditions/interest rates are in my opinion excessive.
Having said this there are other ways to fund a SMSF property purchase such as a member loan but this may not suit a lot of people.
Thanks Mike,
You can't recommend anyone? My solicitor is charging the upper end.. (which I believe is above the odds) and it has been extremely difficult using internet to find anyone… no-one on this forum has come forward as yet?? Wierd! Cheap lead !!
As for banks , your on the money, I organised an Instalment Warrant through online portal, only to have it knocked back by bank , then when my Solicitor made variations, knocked back 4 times, eventhough he had done a plethora of deeds with the same bank before. (apparently the bank changed is policy early in the year due to the APRA changes involving financial products) That is why I'm a little nervous about doing it myself.
Ash, From my experience… assuming you had an SMSF setup, similar to Mike's response.
My last property was a $460K apartment, and the costs over and above normal IP costs were :
Setup Bare Trustee $990 (This is the holder /owner of the property till it is sold or paid off)
Set Up Bare Trust $2000+ (Need one of these for each property) Platform for the property to be held in trust for the SMSF
Legals at Bank lookling at Super Deed and Trust Deed $500
Interest Rate – standard variable 7.25%
LVR 70% (purchase price only, doesn't include Stamp Duty)Cheers
Tim
(I have no pearls of wisdom)
Tim
Please give me a call 02 9263-2631
Mike
Hey mike thanks for the great info. huge help
Ash
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