Non-geared unit trusts (NGUT) allow taxpayers to co-invest with their SMSF in property. The benefits of the NGUT structure include:
- Enables a SMSF with limited funds to co-invest in large property purchases.
- The SMSF can purchase additional units in the NGUT from related parties (at market value).
- The NGUT has flexibility in issuing and redeeming units.
- Unlike a bare trust, there are no restrictions on undertaking a property development.
- Borrowing costs are lower than for limited recourse borrowing arrangements as the non SMSF members can borrow directly from the bank to purchase units in the unit trust.