Technically Speaking: What can you do with an asset held under an LRBA?

According to the Leverage and Risk in The Superannuation System Report recently provided to the Government by the Council of Financial Regulators, real property continues to be the most popular asset class for Limited Recourse Borrowing Arrangements (LRBAs).

As the majority of LRBAs entered into by SMSF trustees are for the purchase of real property, it is inevitable that many trustees will be interested to know what type and degree of building activity can be conducted on their property.

Fabian Bussoletti, Technical Manager SMSF Association, takes a dive into being able to understand whether a proposed development activity will be considered a repair (or maintenance) or an improvement, and when an improvement will result in the creation of a new asset is critical when providing advice to trustees.

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