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Can I live in my SMSF Property when I retire?

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Buying a property through an SMSF has become a popular option for superannuation fund members. This strategy gives members better control of their superannuation, more tax-efficiency, and provides various benefits for those who are investment-savvy. But what happens to your SMSF property when you retire?

In this article, we give you a rundown of what you can do with your SMSF property at retirement.

During retirement: What happens to your SMSF property?

When you retire, you’re not required to sell or liquidate the property you bought through your SMSF. You don’t have to make any changes to your SMSF just because you’re retired or moving to a pension.

Take note, superannuation rules and restrictions such as the sole purpose test still apply to your SMSF property even after retirement. What you can and cannot do to the SMSF property stays relatively the same as long as there are no changes in the use of the property. However, if you're planning to change the SMSF property from an investment to a residence, new rules and restrictions will apply.

Can I live in my SMSF property when I retire?

Yes, there is a way to live in the property you bought through your SMSF. You aren’t allowed to take up residence in the SMSF property if it’s still owned by the fund. So, you must remove the property from the SMSFto be able to live there.This includes staying at the property forthe short term like holidays.

You can live in your SMSF property upon retirement by using the following methods:

  • Purchase the property from the SMSF. This means you and other relevant members will have to buy the property from the fund.

  • In-specie transfer. If the SMSF Trust Deed allows it, the SMSF property will be transferred from the fund to the members. The property will become the members’ personal asset instead of an SMSF asset.

Each option has its own stamp duty and tax implications. Before deciding, it’s best to talk with a professional about the pros and cons of each option.

Buying a property from your SMSF

You andrelevant members can purchase the property from your SMSF if you want to use it for personal reasons. You’ll need to get a property valuation to determine the market value and pay for the asset. Doing so will not deplete your retirement savings. Essentially, you’ll be swapping assets from a property and turning it into cash.

When selling the SMSF property, the rules around buying assets through an SMSF don’t apply. SMSF properties can be sold to related parties if it’s at market value. This means more freedom for those who want to purchase a property that’s technically an SMSF asset.

In-specie transfer of property from SMSF to member

An in-specie transfer allows members to transfer the title of their SMSF property to the SMSF recipients directly upon retirement. Instead of cashing out the SMSF asset and having it distributed to the members, the ownership of the property is transferred.

Using an in-specie transfer to move a property out of the SMSF have certain perks. It allows members to avoid violating the sole purpose test. This lets you or other members live in the property because it’s no longer an SMSF asset. You may also be exempt from paying stamp duty on the in-specie transfer that comes with buying a property.

Make sure the SMSF Trust Deed allows for an in-specie transfer. This method of transfer is possible only if you meet certain conditions of release. Get in touch with a professional to see if you can access your superannuation.

Interested in using your SMSF for a property? Contact us today!

See how much you can borrow on your SMSF home loan with our SMSF borrowing capacity calculator. Learn more about SMSF home loans and how they can help you achieve your retirement goals by getting in touch. Call 13 10 90 or schedule a meeting with our friendly lending specialists!

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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