All Topics / Legal & Accounting / A word of warning on property in your SMSF

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  • Profile photo of Scott No MatesScott No Mates
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    From today's SMSF Alert on Property – SMH Money 06/12/2012

    Just  a few poignant words of warning when putting property into your SMSF.

    Profile photo of TerrywTerryw
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    @terryw
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    I can't believe the things people do! But it happens. One accountant told me one of his clients purchased a residential house in his SMSF and moved into it!. Accountant refused to have anything to do with him after that.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of BruceTBruceT
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    Sounds like a very appropriate response from the accountant!

    Profile photo of Richard TaylorRichard Taylor
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    Yes i totally agree however sometimes it is not always the clients fault.

    Some of the advice i have seen been given from so called professional advisers.

    Real Estate agents are one of the worst who advertise a property for development, strata etc and then put a note that the property would be ideal for a SMSF borrowing.

    Scratch your head and wonder how these guys get away with it.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Dan42Dan42
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    Totally agree with Richard, the advice from real estate agents in particular can be very damaging and costly to the client in the long run.

    But the client also has to take some of the responsibility, for relying on the advice of a real estate agent in the first place.

    I think as accountants we probably don't do a good enough job of telling people that if they mess something up – particularly in an SMSF – it can be costly to rectify. IF it can be rectified in the first place.

    Profile photo of DerekDerek
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    @derek
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    Attended a CPD training day yesterday which focussed on the 'recently' released Australian Consumer Legislation.

    Interestingly the ACL comes into being, as a piece of legislation, as soon as an enquiry is made. A transaction does not have to be made.

    The legislation is quite explicit about misleading advice and the penalties severe if found guilty. Some of the stuff I read coming out of some 'professionals' is appalling.

    If people want specialist advice they should seek out a suitably qualified professional in  the field and be prepared to pay for it.

    Profile photo of TerrywTerryw
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    I've come to the conclusion that very few professionals know what they are talking about. Including lawyers, doctors, hair dressers and travel agents.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Richard TaylorRichard Taylor
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    I agree Terry should have seen the last haircut i got darn disgrace.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Scott No MatesScott No Mates
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    Terryw wrote:
    I've come to the conclusion that very few professionals know what they are talking about. Including lawyers, doctors, hair dressers and travel agents.

    Does that include the ones in Fortitude Valley, St Kilda or Kings Cross?

    Profile photo of theycallmeBrucetheycallmeBruce
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    For any newbies here, and I am too, it is a fact that if you purchase a property within your SMSF you cannot live in it. Correct me if I am wrong —- But the only thing you can purchase in your SMSF that you can benefit from is artwork, you can purchase this and hang it in your own hallway provided that is the most logical and secure place for it. Anything else like this you can buy and benefit from?

    Profile photo of Scott No MatesScott No Mates
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    theycallmeBruce wrote:
    Anything else like this you can buy and benefit from?

    I wouldn't recommend it for rare wines (hmm, I don't know why).

    Profile photo of Rob G.Rob G.
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    theycallmeBruce wrote:

    But the only thing you can purchase in your SMSF that you can benefit from is artwork, you can purchase this and hang it in your own hallway provided that is the most logical and secure place for it. Anything else like this you can buy and benefit from?

    Another example of bad advice.

    Cheers,

    Rob

    Profile photo of theycallmeBrucetheycallmeBruce
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    Gday Rob – you missed pasting my disclaimer so here it is again – Correct me if I am wrong…. Please do share so all can benefit, cheers Bruce

    Profile photo of TerrywTerryw
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    Bruce – this is def wrong. You cannot benefit from Artwork in your SMSF. It would have to be stored away from where you could look at it. Enjoying it would breach the sole purpose test – which is to provide for the retirement of the members, not the enjoyment before retirement.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of theycallmeBrucetheycallmeBruce
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    Cheers for clarifying Terry. I could see this could be frustrating for investors who actually buy speculative artwork in SMSF as you would have to keep it under wraps and not view it until you are age 65 or deemed retired.

    Profile photo of kong71286kong71286
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    Have recently setup a SMSF, and received ATO document NAT 11032 'Running a Self-Managed Super Fund' and it clearly outlines what the role and responsibilities are as a trustee. Here are some of the warnings mentioned on Page 15, which I found funny laugh

    • If your SMS buys art, generally you cannot use it privately
    • Don't Buy Wine as an SMSF investment and then drink it
    • Don't buy jewellery as an SMSF investment and then wear it

    Profile photo of theycallmeBrucetheycallmeBruce
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    Thanks for further clarification Wong cool Do send a link thru if doc available online? cheers

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
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    You don't just have to sit on artwork (metaphorically speaking) and store it in a dark room, there are a few avenues to lease it to companies who will 'rent' your artworks or place them in an art library/art bank (or whatever they call them) and then lease them on short or long term to corporate/private clients. Providing you don't use them, this is fine.

    Profile photo of Richard TaylorRichard Taylor
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    Next thing we will be hearing that a SMSF can invest in a luxury car such as a Bugatti Veron and use it on weekends only as long as you clean before it goes back.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
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    Same rules probably apply Richard, you can’tbe getting a benefit from the investment – it still needs to get driven to the service centre or petrol station though.

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