In acquiring assets into your SMSF, you have to take certain...

In acquiring assets into your SMSF, you have to take certain steps to analyse the proposed acquisition. First and foremost, you need to check compliance with your SMSF Investment Objectives and strategy. It will very quickly be obvious to you that the trust deed will not allow you to purchase a residential house and use it as your own home.

You may like to follow the following steps in any asset acquisition using your SMSF.

1. Determine whether your SMSF is entering into a transaction to buy an "asset", i.e. is what you are buying an "asset"?

2. Determine whether the SMSF is entering into a transaction that is owned by a related party. Related party is defined as a Part 8 Associate of a member ( by ATO definitions).
If the party is unrelated party, are there any restrictions which apply?

3.Determine whether the SMSF is entering into a transaction that is acquiring an asset.Acquiring includes "receiving by contribution", so that if you transfer in specie the house into your SMSF for no consideration this is considered acquiring.

4. Determine whether related party asset meets both the Business related party conditions - eligible interest in real property and -connection between property use and a business ( eg a doctor may buy a property for business but stays in the back portion of the property or a car mechanic might use the workshop for business but occupy the back portion as his home, a bed and breakfast operator may acquire the property as a business into the SMSF and yet stay on it in operating the business etc

5. Determine whether the business related party arrangement may be also caught by other restrictions eg in house asset rule

6. examine whether other trustee restrictions exceptions are available

As the regulations stand, and as your plans stand, it is obvious you would NOT be in compliance of the SMSF rules if you purchase your first home with your SMSF and stay in it. However if it is an investment property from an unrelated party and is rented out as a business to an unrelated party, without any form of enjoyment by any member of the SMSF and trustees, and the purchase is made at arms length and at market prices, then you must examine whether the activity or purchase is allowable under the trust deed, whether it is compatible with the SMSF Investment strategy and whether it is permitted under the SIS Act in relation to investment restrictions ie. sole purpose test, acquisition from related parties, in-house asset rule, arms length rule, borrowing restrictions, restrictions on loans to members and investment strategy must be in place.

Hope this helps.