Invest
Can I renovate the residential property I own through my SMSF?
If your SMSF owns the property outright – that is, your fund has not borrowed to purchase the property – it is possible to renovate or improve the property.
Can I renovate the residential property I own through my SMSF?
If your SMSF owns the property outright – that is, your fund has not borrowed to purchase the property – it is possible to renovate or improve the property.
However, if your fund has borrowed to purchase the property (commonly referred to as a limited recourse borrowing arrangement) and the loan or security trust is still in place, you are only able to make improvements/renovations that do not change the character of the property.
The ATO classifies this as when the character of the asset has been fundamentally changed. For example, a residential house that is converted into a restaurant or a vacant block of land that is subsequently subdivided resulting in multiple titles.
If the renovations/improvements are not financed by the SMSF, but rather are financed by the members themselves or another entity, the value of the improvement/renovation will generally need to be recorded as a contribution made to the fund and will count against the contribution caps.
It is important to note if the renovations are being undertaken by a builder who is a related party of the SMSF, the goods and material required to undertake the renovation should be purchased by the SMSF trustees directly from the supplier and not from the related party builder.
The issue here is the rule that prevents an SMSF trustee from acquiring assets, except for some limited exceptions, from a related party. A breach of the rules will occur if the related party builder purchases the goods and materials directly from the supplier and then invoices the SMSF trustees for the cost of those purchases.
As an alternative to the SMSF trustees purchasing the goods and materials directly from the supplier, it is permissible for a contract to be put in place between the related party builder and the SMSF trustees, such that the related party builder purchases the goods and materials as an agent of the SMSF trustee.
If you are thinking about renovating a property owned by your SMSF, you should consider seeking professional advice from a qualified financial adviser.
Peter Burgess, general manager, technical services and education, SuperConcepts
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
