How is the Single Contract Holding Cost typically calculated?

Several builders have begun offering Single-contract house and land packages. Typically, they collaborate with either a third-party finance provider or a bank to facilitate financing for such purchases. For example, Westpac has recently partnered with select builders to support this model.

To comply with the Sole Purpose Test, the property must exclusively serve as a retirement investment for SMSF members. While it is possible to purchase a house and land through an SMSF, separate land and construction contracts do not meet LRBA requirements. This means that if you are borrowing to finance both land and construction separately, it can create complications. Suppose the land is acquired first, and the house is built under a separate contract. In that case, the ATO may classify them as two distinct assets, rendering the investment ineligible for SMSF borrowing.

As such, if you ask a builder to fund the land and construction before it is completed and transferred to your SMSF, here is an example itemised list of costs the builder has to incur. For example, say the build costs $350,000, the land $250,000, and the land is in QLD, the following will be the cost items. Please note that the figures below are for illustration purposes only and should not be used as an actual calculation: