Alas, the Holy Grail still evades us...Drats; (Monty Python - Holy Grail - 1975).
I guessing most of the comments published last year in NEWS . COM have now gone out the window.
Mr Naoumidis says it’s the “first step” towards DomaCom’s ultimate goal of allowing young people to tap into their super to buy their first home — an idea floated by former treasurer Joe Hockey just last year.
Per the tax office’s ruling, for a $500,000 property, a parent could use their super fund to put in $200,000. The child could then put in up to $49,000, and investors would fund the remaining $251,000.
Finding those other investors, however, will be the sticking point — it may be other family members, friends, or a financial planner may tap their client base.
FOR young first home buyers struggling to scrape together enough for a deposit, seeing tens of thousands of dollars locked away in their superannuation can be painful.
But the holy grail of tapping into that cash to get a foot on the property ladder may be one step closer, following a new ruling by the Australian Taxation Office that paves the way for self-managed super fund trustees and members to invest in family property.
Under the current rules, a person’s self-managed super fund (SMSF) can’t own a property and rent it out either to themselves or someone related to them. The person also can’t buy a property off themselves using their SMSF.
According to advice provided by the ATO to DomaCom, a fractional property investment firm which allows people to buy units in a property in the same way as shares, SMSFs would not be in breach of the rules as long as the fund owned less than 50 per cent of the property.
“Basically what it means is that for the first time, a parent can use their super fund to invest in a property with their son or daughter, and the son or daughter can then rent it,” DomaCom chief executive Arthur Naoumidis said.
“This is a big-picture platform,” Mr Naoumidis said. “If this takes off and we end up having thousands of people using it, volume will create liquidity. I know Joe Public is going to struggle to understand the importance of this, but financial planners and accountants will understand.”
Mr Naoumidis said DomaCom was continuing discussions with the tax office to raise the 50 per cent limit to 100 per cent, but even at 50 per cent it was a “game changer” and “critical” for his company, which is planning to float on the stock exchange next month.
DomaCom chief executive Arthur Naoumidis.Source:News Corp Australia
“The fact is most SMSFs don’t have high enough balances for [the 50 per cent limit] to be an issue and DomaCom believes that, if successful, the limit will be increased over time as the housing affordability issue can only get bigger,” he said.
“Until this process is completed, investors will need to seek specific advice or acquire further ATO advice if they want to acquire more than 50 per cent of a specific sub-fund.”
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