Transfer of property to super

New South Wales Stamp Duty Concessions on Transfer of Property from a Member to a Self-Managed Superannuation Fund

In certain circumstances you can now transfer NSW real property to your super fund with only nominal stamp duty.

Recent changes to the Duties Act 1997 have introduced a concessional rate of duty when real estate is transferred from a Member to their Self-Managed Superannuation Fund (SMSF) under certain circumstances.

Where the transfer is under a limited recourse borrowing arrangement (i.e. a Warrant Trust), duty will be charged at a maximum of $500 where:

  • The individual transferring the property is the sole Member of the SMSF; OR
  • The beneficial interest in the warrant trust is held in a “segregated account” for the sole benefit of the transferring individual.

Where the property is transferred into the SMSF unfunded (e.g. as a non-concessional contribution), duty will be charged at a maximum of $50 where:

  • The individual transferring the property is the sole Member of the SMSF; OR
  • The property is held in a segregated account for the sole benefit of the transferring individual.

The type of property and the market value of property that can be transferred to the SMSF is restricted by the Superannuation Industry (Supervision) Act 1993. For example, as the property is being acquired from a Member of the SMSF, it must be “business real property” and the price paid by the SMSF must be market value. The market value should also fall within the non-concessional contributions cap to avoid penalty tax being payable.

We can assist you in transferring property under these concessions. We provide a full range of services, including:

  • Providing superannuation advice as to whether certain property can be transferred to the SMSF without breaching the member-acquisition rules and non-concessional contributions cap;
  • Establishing an SMSF for you;
  • Reviewing your existing SMSF Deed to ensure the SMSF can acquire the property (including establishing a segregated member account), and amending your Deed if necessary;
  • Providing the documents to establish a limited recourse borrowing arrangement;
  • Providing the documents to establish the segregated account where the SMSF has more than one member
  • Carrying out the conveyance from the Member to the SMSF.

Contact Andrew on 1300 654 590 to discuss your options.
 


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Published by

Andrew

Lawyer to entrepreneurs and investors

8 thoughts on “New South Wales Stamp Duty Concessions on Transfer of Property from a Member to a Self-Managed Superannuation Fund”

  1. Hi Andrew

    The article regarding tfr of property to a SMSF under limited recourse borrowing arrangements was very informative. However, what happens when the property was previously held by Mr & Mrs Blogs, and they want to transfer the property into the fund using a limited recourse borrowing arrangement? Does the fund need asset segregation when they are the only two members of the fund?
    Regards
    Di

  2. Hi Di. Thanks for the comment and question.

    The short answer is that a transfer of property to a super fund under an limited recourse borrowing arrangement does not require segregation from a super law perspective. Provided the property is ‘business real property’, it can be acquired off the members and into the fund, and the fund can use borrowing to achieve this.

    However, what I think you are also asking is whether this can be achieved without stamp duty implications? The short answer to this question is that it depends on which state the property is located in.

    If the property is in NSW then you can qualify for the duty exemption if the members of the fund have an interest in the property after it has been moved into the fund that equals their former interest in the property when it was outside the fund. If the members each held 50% of the property outside super, and the members had exactly the same member balances, then in our view segregation would not be necessary. However, this is rarely (if ever) going to be the case. Furthermore, you must undertake to the OSR that the interest of the member in the property in the fund is going to be maintained. Accordingly, without segregation, a change in member balances would effective result in a change in interests in the underlying property.

    Therefore, our view is that asset segregation is necessary. Hope this helps. Andrew

  3. What happens if the property is transferred into the SMSF from a sole owner to a sole member SMSF and then afterwards, a second member joins the fund? Does the fund need to go back to the OSR and pay duty, does the fund need to segregate the assets, or is it perfectly fine if the second member joins after the property transfer?

  4. The property must be transferred and then held by the fund on a segregated asset basis solely for the member (or members) who transferred the property in. A term of segregation must be that no other member can obtain an interest in the property. This is a condition of getting the stamp duty relief from the OSR.

  5. Hi.

    I have noted the previous comments.

    What is the situation if the business property is owned by a company the directors of which are the only members of the SMSF? Can the company transfer the business property to the SMSF for concessional stamp duty?

    Jennifer
    NSW

  6. Hi Jennifer

    Unfortunately not. The company is a different ‘legal identity’ to its shareholders and directors. A transfer from the company to the super fund will be subject to stamp duty at normal ad valorem rates.

    Andrew

  7. is the stamp duty exemption available if the property being transferred is from a discretionary family trust

  8. I’m afraid not. The exemption only applies if it is being transferred by the individuals who are members of the fund.

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