Investment - SMSF

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Can I live in the holiday home that I wish to buy through my Self Managed Superannuation Fund?

To ensure your SMSF does not breach the SIS Act, you and your family cannot receive any benefit from an investment property owned by your SMSF. This includes personal use of the property at anytime.  All assets must be held for the sole purpose of providing retirement benefits to the fund members.
 
The SMSF can however purchase a property to be rented out to others as a holiday home.  If you or your family decide to stay in the property for any period of time, it will no longer meet the sole purpose test, and the Australian Taxation Office may classify the total asset as in-house. 
 
If the value of the holiday house is greater than 5% of the total assets in the SMSF, and is also considered by the ATO as an in-house asset, the SMSF will lose the concessional tax treatment of 15% and be taxed at the marginal tax rate of up to 46.5% (as at June 2013).
 
As there are serious penalties for getting your property investment strategy wrong within a SMSF, you should seek advice from your financial adviser or accountant.
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