Benefits and risks of buying property with gearing through your SMSF

There has been a lot of discussion recently about limited recourse borrowing arrangements for SMSFs, which is the means by which you can use a self-managed super fund to borrow and buy an investment property.  Many of you have also discussed this with us while completing your annual tax return.

While they can offer long-term benefits to fund members, a non-complying arrangement can have dire financial consequences for trustees if they are unaware of the pitfalls.

We are aware that many seminars and articles have been devoted to explaining the benefits of a limited recourse borrowing arrangement without necessarily pointing out all of the risks.

We are therefore please to provide a fact sheet to help you understand both the key benefits and the key risks of a limited recourse borrowing arrangement.

If you would like to discuss this further and its possible application to your own situation, please don’t hesitate to contact Michael Rees-Evans, Partner – Wealth Consulting on 02 9299 7044, or by email at michael.rees-evans@lockwood.com.au

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