Property: To gear or not to gear?

Technical Summit 2021

Trustees continue to gear using limited recourse borrowing arrangements (LRBAs) to purchase real property in their SMSF but is this always the best option?

This session will look at the rules and restrictions which apply when gearing inside an SMSF to buy property. The session will then examine the alternative structures available to SMSFs without borrowing directly and unpack the benefits, risks and rules involved so that you can help trustees identify which real property ownership structure best suits their circumstances.

At the end of the session, you will be able to:

  • Understand the different structures to achieve ownership of property for an SMSF;
  • Recognise the advantages and disadvantages of using limited recourse borrowing arrangements when compared to alternative structures, and;
  • Comprehend how the relevant rules apply in different trustee circumstances to identify the most appropriate structure and when it may be appropriate to gear.

The contents of this resource are taken to be correct at the time of publication.

Disclaimer: Technical Papers contain factual information only and are prepared without considering particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. The information contained in this document does not constitute advice given by the SMSF Association to you. If you rely on this information yourself or to provide advice to other persons, then you do so at your own risk. The SMSF Association is not licensed to provide financial product advice, legal advice or taxation advice. We recommend that you seek appropriate professional advice before relying upon the information in this technical paper. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this paper is not considered financial advice for the purposes of the Corporations Act 2001. © SMSF Association