New to SMSF forum

Evening all,
As we are new to this sort of thing I'll just feel my way in.

I have had a bit of a crazy idea that maybe my wife and I can use some of our accumulated super to purchase a rural mixed farming property on the edge or outer areas of one of our Qld provincial cities.

So being new to this is this possible to use our super plus a loan to purchase the property and is it possible to still live on the property and how if possible do you get past the at arms lenght laws.

It would be a profit or loss situation depending on the seasons.
We would still working at our jobs and still have Super income coming from these jobs.
Do we have to lease the farm back from the SMSF,can we lease the farm out to a third party to farm, if we where to lease it from the SMSF can we put any profits from the farm straight back into the SMSF?
Thanks for your time.
Cheers,
brcdiesel

 

Hi brc and welcome

Without going into too much detail, in concept, what you suggest MAY be possible.

The residence portion has to be less than 2 hectares. The property must be leased at market value rates to the trading entity that runs the farm - and the rent must be paid regardless of the seasonality / profitability of the trading / business entity.

You need to get your head around the separation between the property and the business - which can be tricky in a rural situation. There is a farm business and a farm property. You can lease the farm property to a third party. You are able to make contributions from the business to the SMSF - but mind the $25k per annum per person cap.

Depending on the area, the LVR on the loan will be quite low - as with most rural properties - 50% or less.

Also realise that many farms are made up of multiple titles - and if the titles can be dealt with separately, they cannot be combined for convenience with a SMSF + loan purchase (this is called the single acquirable asset rule).

Something like this is so easy to get wrong. Set competent paid for advice for someone who knows what they are talking about and who can ensure it will work, increase your wealth and achieve what you want it to achieve.

SM