Purchasing a property through your SMSF can be a complicated process. If you are not familiar with the area in which you have decided to buy, it can be even more complicated.

As SMSFs are regulated on a Commonwealth level, the same rules will apply to your SMSF no matter where you decide to purchase a property. However, there are a number of aspects of the conveyancing process which differ from state to state. If you are not aware of these things it could cause you problems.

If you decide to purchase a property in Sydney through your SMSF, here are some things you should know to avoid any issues as you move towards settlement.

Settlement period

In NSW, the default settlement period is 42 days from the day of sale. This means that settlement will be due 42 days from the day that you sign a contract to purchase an SMSF property in Sydney.

As SMSF purchases are more complex than other property purchases, it is crucial that you are organised enough to be ready for settlement within the 42 period. One way to help this is to be aware of the settlement period before deciding to sign the contract of sale.

Cooling off rights

You should also be aware of your cooling off rights once you have signed a contract of sale. If you decide that you do not want to continue with the purchase after signing a contract, you can cancel the contract during the cooling off period.

There is some variation in the lengths of these cooling off periods from state to state. When you sign a contract to purchase a property in Sydney, you will have five business days in which to exercise your cooling off rights.

If you do decide to cool off on the contract, you will forfeit 0.25% of the purchase price to the vendor.

Stamp duty

A significant part of your SMSF purchase will be the payment of stamp duty at settlement. Stamp duty rates charged on property transfers differs from state to state. It is important that you are aware of the rate that will apply to your property in Sydney so that you can assess the overall cost of your purchase.

In NSW, stamp duty is payable within three months of you signing the contract of sale. The amount of stamp duty you will be required to pay is calculated on the sale price of the property or its market value, whichever is higher.

Stamp duty is charged in NSW at the following rates:

Property ValueTransfer Duty Rate
$0 to $14,000$1.25 for every $100 (minimum $10)
$14,001 to $31,000$175 plus $1.50 for every $100 over $14,000
$31,001 to $83,000$430 plus $1.75 for every $100 over $31,000
$83,001 to $310,000$1,340 plus $3.50 for every $100 over $83,000
$310,000 to $1,033,000$9,285 plus $4.50 for every $100 over $310,000
Over $1,033,000$41,820 plus $5.50 for every $100 over $1,033,000

Stamp duty is a significant added cost when buying a property, to avoid any shocks you should be aware of your stamp duty obligations before you sign a contract to purchase an SMSF property Sydney.

As these things are particular to purchasing property in NSW, it is useful to seek out advice on them before you sign a contract to purchase an SMSF property in Sydney.