Myths and Facts regarding Self Managed Super Fund
Myths and facts regarding self managed super fund
Myth about self managed super fund, SMSF
A SMSF can obtain residential estate from a fund member.
Fact about self managed super fund SMSF
Trustees are abstained from obtaining assets for the fund from the funds related party with certain limited exemptions. One exemption is connected to real estate business.
Normally, real estate business means land and building that is used solely for business. Real estate business is free from the rule restricting trustees from obtaining assets from related parties.
Trustees of a SMSF can obtain about 100% of the total assets of the fund in the form of real estate business, given that they obtain it at market price. Trustees of super fund should check that the investment in real estate business is according to the investment plan such as diversification of assets, liquidity and maximization of the funds member benefits.
When real estate business is utilized in primary production business like a farm, it can pass the test of being used solely for business purpose only if just two hectares of land holds a house and it is utilized for personal or domestic reason. Nevertheless, the total property cannot be utilized for domestic or personal reasons.
