06 Oct

Can I renovate a residential property I own through an SMSF?

If you’re thinking of giving your home a total makeover using your SMSF, think again. Unfortunately, while you and your fellow trustees have some control over your fund, it doesn’t mean you can spend your money however you like.

The ability to renovate a residential property that you own through an SMSF comes down to how you purchased it. Those who borrowed through their fund to buy the property are restricted in what they can do. Slight improvements and repairs can be made, but a full-blown renovation is saved for those who used the cash in their fund to buy the property.

If a property is purchased outright using the cash in your fund then you are entitled to do whatever you like to the property, provided your deed allows you to do so.  This may also include subdivision or development.

Those who borrowed through their fund aren’t entirely prohibited on making improvements on their property. Repairs are allowed, but they can’t be significant alterations that change the inherent character of the property.  If you want to make renovations to your property, the best way to do this would be by borrowing outside of your super fund.

Whether you’re renovating to repair with borrowed funds or doing a complete makeover with accessible cash, renovating through an SMSF is only worthwhile if it improves the return on your property exponentially. Not playing by the rules or accessing your SMSF prior to retirement for personal gain can result in hefty penalties with fines up to 40 percent of the fund value.   

To discuss whether it is beneficial to renovate through your SMSF or to find an alternative, contact the team at Rise High Financial Solutions and speak to one of our MFAA accredited brokers today.

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Marissa
Schulze

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JAMES
SCHULZE

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THUY
NGUYEN

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Katie
Costa

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Nani
Johnston

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KRISTIN
TUNBRIDGE

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RICHARD
O'GRADY

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