Hi everyone, it’s Glen from 21st Century Group. I’m here with Andrew Monckton the owner of CM partners – Chartered Accountants. And we had a session before where we spoke about Self-Managed Super Funds and property. So I’ve got a few more questions for Andrew and I’m sure he’ll be able to answer them. So Andrew say hello to everyone! Yes hello everybody What are the restrictions on buying a property through a self-managed super fund or SMSF? Thanks Glen. The overarching restriction and that applies to any asset really that you buy in a self-managed super fund is it needs to meet what they call a sole purpose test. So it’s got to be for your retirement benefit. What that means is You are restricted on if it’s a residential property, on who can live in the property. It can’t be a related party, of any of the members of the Self-Managed Super Fund. And there are also restrictions around the type of residential properties that you can buy. It needs to be a property that is acquired under a single title. It can’t be vacant land, although house and land package is fine. And if you do have a property that’s subject to what’s called a, Limited Recourse Borrowing Arrangement, where a lender has advanced the super fund money to help acquire the property, then you need to be very careful that when you renovate the property, you don’t undertake renovations so substantial that they change the nature of the property as well. So you need to be careful on any further, you know major renovations or that are undertaken on that property. All right. Thanks Andrew.
And another question is what are the costs involved in having a Self-Managed Super Fund? Yeah! Sure. So number of costs? Or annual cost. Yeah. So I guess we can, we could break it into two categories: there’s those costs to establish a Self-Managed Super Fund, those one-off start-up costs which can include such things as obtaining a Statement Of Advice, which is recommended just to ensure that the Self-Managed Super Fund environment is the right environment for you. You’ll then need to have a trust deed established for the super fund.It’s recommended that the super fund has a corporate trustee. So there are some further costs in setting up corporate trustees for the super fund as well. If your fund is looking to borrow money from a bank, again that the bank will require a separate trust deed for the borrowing trust. They would also suggest a corporate trustee, for that trust as well. So we start to get into layers of costs to get the Self-Managed Super Fund established and a limited recourse borrowing arrangement in place. Once those one-off establishment costs have been met, you’re then looking at each year the fund will have an obligation to prepare a set of financial statements. It will need to have those financial statements audited and the fund will also need to prepare and submit an income tax return. Okay. So then you’ve got those costs on an annual basis for he life of the fund as well. Great. Fantastic. Thanks Andrew. Thanks. Well there you are. You’ve heard it all now. Well not all of it, but most of it anyway. It’s Glen from 21st Century group and once again I’m here with Andrew Monckton, the owner of CM Partners – Chartered Accountants. And hope to see you soon. Bye for now. Thank you. Bye.
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