Although the Australian Taxation Office has recently provided clarification and greater flexibility with regard to claims about borrowing to invest in real estate in a self-managed super fund SMSF, Manly Private Wealth reminds advisors that the strategy still does not fit all SMSF.
There will likely be increased interest in strategies for clients, particularly attractive from the point of view of taxation, but tax issues, diversification and liquidity still need to be taken into account, Self Funding Instalment Warrants may provide the asnwer however be sure you understand the implications.
One of the main areas people are still wary of a substantial loan, is because without a guaranteed cash flow this would would create a great economic stress – especially when you can not use the funds outside the SMSF to service the loan.
If you can not rent the property or service the loan within the member fund may be forced to sell.
It ‘better to be inside the SMSF portfolio, so risk is not offset by other assets within the fund.
Self Managed Super Fund Trustees need to take into account a wide range of variables. For example, if alternative sources of funding available, if the Self Managed Super Fund has the ability to finance the loan and that the assets negatively or positively oriented
There are big changes happening in the industry, and it is more important than ever for advisors to gain the support of technical specialists who can help them navigate change.
This is where an investment advisor from Manly Private Wealth can assist.
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