SMSFs and arrangements to purchase property

December 2012

The ATO has released a taxpayer alert on SMSF arrangements where the fund acquires property.

The ATO is particularly concerned where limited recourse borrowing arrangements are executed or where unit trusts are used as vehicles to hold the property. The key warning is that falling foul of the SIS rules may require the fund to sell the property and this can represent a significant transactional cost.

The alert outlines two broad arrangements and some of the key SIS contraventions that can occur where the arrangement to acquire property is incorrectly implemented. This alert is definitely worth a read because it is a practical summary of some of the key issues to consider when acquiring property through an SMSF.

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Last updated December 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.