Retiring to a House Owned by Your SMSF

Question

I am 63 yo and have reached retirement age. My SMSF has a residential property asset (no outstanding mortgage). I would now like to live in the property.
I would like to make an in specie transfer of the asset from the SMSF into my name without the need for cash to change hands in finalising the transaction.
Is it possible to transfer the property without cash?


Answer

You are on the right track, you certainly can’t live there until you transfer it out. Nevertheless, this strategy is worthy of some very detailed tax planning. The questions that come to my mind:

  1. Does the trust deed allow this – probably, but check
  2. Are you already in retirement phase? If so are you able to take a lump sum payment?
    If not yet in retirement phase consider locking into retirement stage to make sure no CGT is payable as transferring it out will be a CGT event at market value.
  3. The consequences to your overall retirement plan. The idea is to have the majority of your retirement savings in the lovely tax free super environment. Will this mean that your current home will be sold and leave you with too much money outside of super? Maybe you can utilize the downsizer provisions to transfer the sale proceeds of your current home (up to $300,000 per spouse) into super plus drawing forward the non deductible non concessional caps. Careful timing here as you must be age pension age before you can utilize the downsizer and it needs to be done within 90 days of sale so it will have to wait. If you can’t wait then seriously consider actually paying the SMSF for the house with the sale proceeds from your current home.
  4. Yes you can transfer without cash but you will probably still need to pay the stamp duty.

I do like the strategy of selling of the family home tax free and moving into a property you have been holding as a rental but this is definitely a time in your life when it is worth investing in a full professional financial plan. There is so much more that needs to be known about your circumstances to fully cover off on this issue. A financial planner should be able to make sure the whole arrangement is tax free but also make sure you have everything set up for your maximum benefit and pension in retirement.


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