It is important for the validity of an SMSF LRBA for clients to execute (sign and date) their bare trust at the correct time. So when to date a bare trust deed for an SMSF borrowing?
You can set up your bare trust online here: Bare Trust.
When to date a bare trust deed?
The applicable date for a bare trust deed varies State by State.
The following table illustrates when the bare trust deed should be executed and the applicable duty to be paid.
Table courtesy of Vicki Grey.
The following summarises when to date a bare trust for an SMSF property purchase:
- QLD – Before or on contract date
- NSW – After contract date
- ACT – After contract date
- VIC – After contract date but before settlement
- TAS – After contract date
- SA – After contract date but before settlement
- WA – Before or on contract date
- NT – Before contract date
LRBA Frequently Asked Questions
The following article answers some common questions when it comes to buying property with super: Buying property with super – common questions
- What name should be on the property purchase contract for an LRBA?
- Does a company need to be used as trustee of a holding trust / bare trust for an SMSF borrowing?
- Can an SMSF buy a land and build a house / develop a property?
- How long does it take to set up an SMSF and LRBA structure?
- How much can can SMSF borrow?
- How much does it cost to set up an SMSF to buy property?
- Can I use my super to buy a house?
Limited recourse borrowing refresher
For those who have not yet jumped into the waters, an LRBA for a real estate purchase is when:
- the SMSF trustee borrows from a lender to buy property (in the event of default the rights of the lender must be limited to the property purchased),
- the SMSF trustee has an agreement with a holding trustee that the holding trustee will hold the property for the super fund (i.e. the bare trust deed covers the relationships), and
- the holding trustee enters into a contract and buys property from the vendor using money from the SMSF trustee.
Queensland and the NT are the odd ones out when it comes to when to date a bare trust deed. In QLD and the NT the bare trust deed is dated before the contracts are entered into, however in practice they can be signed on the same day.