Plan to expand the bank of mum and dad

Plan to expand the bank of mum and dad

DomaCom Australia claims a breakthrough with the launch of a product that will allow parents to leverage their self-managed super to buy property that can be tenanted by their children – without breaking the law.

What is known as the sole-purpose test prevents self-managed superannuation funds buying a home and renting it to a “related party”, a category that includes immediate and extended family.

But DomaCom said it had the all clear from the Australian Tax Office for a novel arrangement that would allow young people to co-invest with their parents and apply to live in that property, as long as rent is paid at market rates.

DomaCom founder Arthur Naoumidis said he wanted to tap superannuation to dramatically expand the capacity of the so-called bank of mum and dad to help youngsters on to the property ladder.

He also plans to launch the nation’s first listed residential property trust.

“Parents will be able to more formally support their kids to get on the property ladder using their SMSF on an arm’s-length basis,” he said.

“The bank of mum and dad already provides $30 billion of support and we believe this could be a much larger amount.”

DomaCom is a fractional property investment platform. In fractional property investment, an investor buys a portion of a property and is entitled to a share of the rent it earns.

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Source: Plan to expand the bank of mum and dad