hi guys'
just chasing some ideas for my parents who are ready for retirement . they have five rental properties with no debt, grossing around $1000/week before running costs. they have no super. is there any way of transfering these properties to a set up where they are used like super and incurr no tax. im trying to motivate them to see a financial advisor. any ideas would be much appreciated.thankyou
Are the properties held in a trust or in their own names?
If they are held in their personal names I think that you are out of luck. There are rukes about "at arms length" transactions and so transferring/selling the properties into a super fund breaches these rules.
Although I am not an accountant so dont know exactly.
Cheers,
LukeGrossing around $1000/week = $52,000/annum less costs.
Amount of tax payable will be reasonably small if properties are owned jointly.
Will still need to seek financial advice as they will probably be over the assets threshold for any reasonable pension. Some selling down in a low/no income year and transferring cash into super fund may be of benefit.
But, like Luke, I am not a financial planner. Some more information may be of use to the forum as they endeavour to throw ideas up for your consideration.
thanks guys,
the properties are held personally in both names. they also have operated a business for the past 40 years. they have only ever split income and never operated in a trust/company etc.cheers
I think it depends on the type of property. At the megaconference last year an accountant told me that you are permitted to transfer commercial property into super at retirement but the same does not apply to residential property.
As Derek said, the amount of tax will be low but the lower the better so might be worth chatting to a good accountant.
Yes a smsf can purchase business real property from a member or related party but not residential.
The parents could sell a property and make a deductible contribution to the SMSF which could wipe out or reduce the tax, but there would still be purchase and selling costs – assuming they buy another property in the SMSF.
But, if the income is only $52k then that is $26,000 each presuminging 50/50. No tax is payable until about $20,000 pa. so with w a few tax deductions they should not be paying much tax anyway.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
5 properties grossing $1000/wk means the average is only $200/wk/property.
Are the properties 'under rented'?
thanks for your ideas. the rents have actually not long been increased. theres probably one that still could be increased, although they are older style houses in a regional area.
cheers
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