Join our investing community

SMSF - Loophole in "related party" rules

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Doogs2009, 30th Apr, 2010.

  1. Doogs2009

    Doogs2009 New Member

    30th Apr, 2010
    Newcastle, NSW

    I have been doing some research on SMSF's where i want to purchase an investment property using my super. I am aware of the In House - related party rules but was wondering if any one new of any work-around or loopholes in these. Is is possible to appoint a caretaker in a houseminding capacity to reisde in the property and get them to pay you the landlord in lieu of rent. Say if a family member was to act as a caretaker for you because the property was in a distant location, and the family member didnt pay you rent, could this be done and acceptable under the guidelines.

    Any info offered would be appreciated.

  2. Superman

    Superman Well-Known Member

    6th Nov, 2007
    Gold Coast, QLD
    You can't lease or allow a related party to lease or utilise a residential property owned by your SMSF - even if they pay full market rent.

    Commercial property is OK provided it is all done at arms-length - but not residential.

    There are so many issues with your idea I don't know where to start.

    If you do either of your strategies you will at a minimum breach the in-house asset rules and also the sole purpose test (and probably a whole bunch of other ones) and make your SMSF non-compliant and lose 45% of the assets. Not to mention huge fines and jail time for the trustees personally.

    To answer your question there are no loop-holes or work arounds in the in-house asset rules - and to back it up is Sec 85 of the SIS Act which is an anti-avoidance provision - meaning anything you do to try and avoid the in-house assets will be picked up.

    Nothing you have suggested would be 'done and acceptable under the guidelines'. Sorry.


    If you want to purchase a property as part of your SMSF investment strategy go ahead if it is right for you - but lease it to an unrelated party and get market value rent.

    It is hard enough saving for retirement without entering into a scheme which would not only put 45% of your super assets at risk (and potentially huge personal fines and/or jail for the trustees) but where your SMSF would also miss out on the rental return it deserves - it just doesn't make sense! Your super is for your retirement - it is not a charity to give family members a free ride.

    I suggest you click here to complete some SMSF trustee education.

    Have a good weekend.
  3. pestgirl

    pestgirl SMSF novice

    28th Apr, 2009
    Windsor nsw
    Thanks Superman

    I have just been reading up on SMSF's... and thanks for the link that you suggested to Doogs2009.

    I have just completed the e-learning course.... which everyone who has a SMSF should do..... thanks again for the link :) :)