Is your SMSF the next Donald Trump?
The current US President used to be a property developer. Many SMSFs want to follow in his footsteps. Unfortunately, they are a lot more hamstrung in doing so than he was. Jeff Song from Townsends Lawyers explains.
Developing a property is a possible investment option for SMSFs but is not for the faint hearted as it will attract greater scrutiny from the auditor and the ATO.
The regulator by its SMSF bulletin (SMSFRB 2020/1) has formally shared its concerns about SMSFs entering into arrangements involving purchase and development of real property. Among other things, the regulator is concerned about a popular structure often used for property development which is investment in ungeared unit trusts, also commonly known as 13.22C unit trusts. Given this, it’s probably a good time to revisit some of the common compliance issues associated with this type of investment.
One of the reasons the ungeared unit trust structure is popular is that it allows an SMSF and their related parties to legitimately combine their finances to acquire and develop properties without breaching the in-house asset rule.
Let’s consider an example of Donald and Melania who are the only members and trustees of their SMSF... Read the complete Townsends Law article at:
https://www.townsendslaw.com.au/blb-news/838/is-your-smsf-the-next-donald-trump/
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