Stamp duty savings when you transfer property to your superfund
A useful tax planning strategy can be to transfer real estate that you own in your own name, to a self-managed superannuation fund (SMSF) of which you are a member. Until recently, doing this would have meant paying the NSW Government stamp duty calculated at ad valorum rates (in other words, a percentage of the value of the property transferred).
Paying stamp duty at those rates would add a packet to the overall cost, and could have made it simply unaffordable. But as a result of a recent change to the Duties Act, there’s a concession if you transfer property to your super fund. Instead of having to pay stamp duty calculated at ad valorum rates, you only have to pay a flat $50 fee.
To give you some idea of the difference; before, if you transferred a property you own valued at $500,000 to your self-managed super fund, you would have had to pay stamp duty of $17,990. Now, your stamp duty bill will only be $50. That’s pretty attractive.
Of course, you have to meet certain criteria to get the concession. For a start, it can’t be just any superfund. It has to be a self-managed super fund (SMSF).
As opposed to an industry super fund, a SMSF is a super fund that you set up and run yourself, in line with superannuation laws. It means you (or a company you own and control) are the Trustee of the fund so you essentially control how your super gets invested. The aim of a SMSF (as with all super funds) is to give its members benefits when they retire.
Every super fund has a Trust Deed containing rules for running the fund, and stating what the trustee can and can’t do. One of the requirements for being able to get the concession is that your SMSF has to permit the property you transfer at the concessional rate of stamp duty, to be held and managed for your benefit only. It can only benefit you in your retirement – not any other fund member. If your SMSF doesn’t currently allow this, you’ll need to have the Trust Deed amended so the concession can apply. That might mean you need a professional to look over it and assist you with the amendment.
Ultimately, inside a super fund there are substantial tax concessions. If you own property and you want that property to be managed so as to be able to access the tax savings available to a SMSF, it now costs less to achieve than it used to.
But you have to get the paperwork right.