Borrowing money to fund your SMSF can only be done in limited circumstances. Strict rules and regulations are put in place to ensure that SMSF’s are established and maintained solely to provide benefits to members upon retirement.
Borrowing for security transactions
An SMSF can borrow money to cover the settlement of security transactions under certain conditions.
These conditions are:
- The loan is no more than 7 days
- The loan is no more than 10% of the fund’s assets
- At the time the investment was made, the borrowing was not needed
Limited Recourse Borrowing – Property
If loan monies are required to facilitate the purchase of an investment property in your SMSF, then it is only permitted via a limited recourse borrowing arrangement.
A limited recourse borrowing arrangement with the bank of your choice helps safeguard your other investments in your SMSF. However, it is important that you get the correct advice from the start when deciding on whether to purchase a property in your SMSF via a limited recourse loan.
Our team at SPC can help you every step of the way. From the very beginning, our financial planners can advise and guide you on whether a particular property investment is in your best interests. SPC Corporate Solutions can then set up all entities required including the SMSF, trustee & custodian companies and bare trust documentation. Finally, our team of accountants will be able to assist with the administration and compliance side of the SMSF and all other regulatory requirements.
Come and see us, to talk about the options available to you.