Can I pool my SMSF with a friend or family member to buy an investment property?

Answer

Your SMSF can co-own an asset with another entity, including friends and related parties.

However, you need to be aware of the rules which prevent your SMSF from acquiring all or part of a property owned by a related party of your fund, and which prevent your SMSF from renting a property which it owns, either in part or full, by your fund to anyone who is a related party of your fund.

The rules do not apply if you are buying a property from a related party, or leasing it to a related party under the business real property rule and it is done at market value (generally a property is considered to be business real property if it is used wholly and exclusively in one or more businesses).

There are also rules which prevent an asset, which is owned either in part or full by your SMSF, from being used as a security.

There are different ways an SMSF can co-own an asset. For example, you could use a tenants-in-common agreement or, alternatively, you could co-own a property through a unit trust or company structure. Each approach has its own advantages and disadvantages. Co-ownership arrangements involving an SMSF can be complex so it might be worthwhile talking to an expert in the field.

We recommend that you speak with a financial adviser to help you decide if buying property through your super fund is right for you.

 

Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

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