SMSF basics: Can my fund buy my residential investment property?

Q: I own a unit as an investment property. I would like to keep this unit as long as possible. The unit is a safe income stream and a safe haven against market uncertainty. However, if I have to sell it later, I won’t be able to put the money into my SMSF because of the work test (as it is virtually impossible for a person over 65 to find a casual job in the current economic climate). I am thinking about another solution: selling the investment property to my SMSF. What do you think?

Trish’s response: Unfortunately, under the super rules, a fund member of a self-managed super fund (SMSF) cannot sell a residential property to the SMSF.

Residential property cannot be transferred into a SMSF as an in specie (non-cash) contribution either. Conversely, a SMSF can sell a residential property investment to a fund member, subject to certain conditions.

In relation to your comments about the work test, I agree that the current economic climate makes the work test a challenge for many Australians aged 65 or over. I believe the Government should relax the work test rules to accommodate older Australians trying to improve their financial circumstances, and who generally did not have the opportunity to contribute to super in the past.

Background on work test: Anyone aged 65 or over must satisfy a work test before making super contributions. If an individual aged 65 or over is seeking to make super contributions, then he or she must be gainfully employed for at least 40 hours in a consecutive 30-day period in the year in which you make the super contribution. I explain rules applying to over-65s in the article For over-65s: Ten super tips when making contributions.