There has been good money made for some people from selling classic cars over the past few years. Even new cars can be worth more than what was originally paid for as soon as it is taken off of the lot.
This is a rare occurrence, however, and to make money out of a car, you need to know what you are doing.
But what if you are an expert and see the perfect buy that requires $100,000 (and your only access to that money is through your superannuation), can you make this purchase with your SMSF?
There is no sense in thinking that your super fund will simply be able to go and buy a classic car for your enjoyment. It will not be stood for, and you will likely lose money and the car.
Purchasing a classic car can be done, but only if a very strict set of rules are complied with.
This strict set of rules applies not only to cars but also to what the law calls “collectibles”. These collectibles extend to stamps, artwork, wine, coins, memorabilia and others.
The rules require that the collectibles are insured in the name of your fund, that they are kept away from your place of residence and that you are not allowed to use them at all (a classic car can’t be driven to the mechanic, for example). Repurchasing these collectibles from your fund will require a formal written valuation.
While investing in a collectible is allowable in an SMSF, it should only be used for proper investment purposes. It should not be thought of as a way to buy something ‘cool’ with your superannuation money.
After carefully considering your options regarding these collectibles, the costs and whether or not it is a proper investment, it can be done. It’s advisable to speak with us first to ensure you are prepared and in compliance with the rules. Start that conversation today.