A Self Managed Super Fund wanting to borrow to buy a property faces an unnecessary complication in that the property must be held by a separate company under a bare trust on behalf of the Super Fund.
When the borrowing is repaid, it is necessary to transfer title of the property from the bare trust to the Super Fund, however in many States this would involve a substantial stamp duty cost.
In Queensland, the Duties Act 2001 has been amended to exempt from stamp duty a transfer of property to the Super Fund when the loan is repaid.
Due to the wording of Section 71(8) and (9) of the Superannuation Industry (Supervision) Act, it is a requirement that on repayment of all borrowing, the property be actually transferred into the name of the Super Fund. Hence, in some States where stamp duty is applicable, it would be wise to ensure that any borrowing arrangement is not fully repaid wherever there may be difficulty in meeting any stamp duty cost.
Accordingly, it is very important to obtain professional advice before your Super Fund enters into any borrowing arrangement involving the acquisition of an investment property.
Stamp duty impositions and exemptions vary from State to State.
WTB 32/1448.
Comments are closed.