Buying through your SMSF in New South Wales
The contract and prescribed documents
In New South Wales the seller's contract must attach the documents listed in Schedule 1 of the Conveyancing (Sale of Land) Regulation 2022, including the title search, the council's planning certificate, drainage diagrams, and dealings for easements, restrictions and covenants. If one is missing when the contract is signed, the buyer may rescind within 14 days of exchange. Off the plan contracts must also include a disclosure statement and a draft plan. For an SMSF we check these against the fund's needs, particularly the zoning and current use where the fund is relying on the property being business real property.
Exchange and cooling-off
A NSW purchase becomes binding when contracts are exchanged, and the deposit is paid at exchange. For an SMSF it should come from the fund's own account, so the money needs to be in place beforehand. For residential property, the buyer then has a cooling-off period ending at 5pm on the fifth business day, or ten business days for an off the plan contract. Pulling out costs 0.25% of the price. There is no cooling-off at auction or on a same-day exchange after a property is passed in. Cooling-off can be waived with a section 66W certificate from the buyer's solicitor or conveyancer, which a competitive sale sometimes calls for. A fund should only waive once finance, the structure and the buyer's name are all settled.
Transfer duty and SMSF concessions
Revenue NSW charges transfer duty on the purchase in the usual way, but it has specific SMSF concessions:
- a custodian's declaration of trust over property it buys for the fund: $750, if full duty was paid on the purchase, the fund provided the purchase money, and the fund already existed when the custodian signed the contract
- transfers between the fund's trustee and its custodian, such as when a loan is repaid: at most $750
- an eligible transfer of a member's property into their fund: $750
- a transfer caused by a change of trustee: $100.
Each has evidence requirements, and the first depends on getting the order of steps right before exchange: the fund must exist, and the custodian must be ready to sign. Full duty generally applies when a member later buys property from the fund.
When the fund is selling
As seller, the fund has to attach the prescribed documents to its contract before anyone signs, or the buyer can rescind within 14 days of exchange, so we order the certificates before the property goes to market. If a custodian holds the property under a loan, the custodian is the seller on title and the loan is paid out at settlement. The proceeds must go to the fund's account. See Selling property in an SMSF.
Settlement
Settlement usually happens around six weeks after exchange, unless the contract says otherwise, and is done electronically. We act from Melbourne, so nobody needs to attend in Sydney. For more on buying in NSW, see Buying property in an SMSF in Sydney and Whose name goes on the contract?