Conrad owns a small hotel worth $800,000 through his company Hotels Pty Ltd. He is considering transferring the hotel to his SMSF.
He has several options:
- Sell the hotel to the SMSF if the fund holds sufficient funds. The SMSF could potentially borrow through a limited recourse borrowing arrangement if it does not have enough money to buy the hotel.
- Sell part of the hotel to the SMSF based on available funds. Hotel Pty Ltd and the SMSF can own shares in the hotel as tenants in common.
- Transfer the hotel to the SMSF in one or more in-specie contributions, subject to contribution caps – an in-specie contribution is a contribution made other than in the form of cash.
Before transferring ownership, Conrad should also consider the costs to transfer the property into an SMSF (e.g. stamp duty and capital gains tax).