Limited Recourse Borrowing Arrangements

Dlrbaid you know your self-managed superannuation fund (SMSF) can borrow money to invest in commercial or residential property? This is a great way to grow your assets and plan for your future financial security.

How is this done? By using a Limited Recourse Borrowing Arrangement (LRBA). Too much terminology? Basically, Australian legislation was introduced in 2007 and amended in 2010, enabling SMSF members to use a loan within the appropriate structure (LRBA) to purchase assets. SMSFs can use borrowed monies with their own accumulated funds to purchase a single asset, or collection of identical assets with the same market value eg a parcel of shares.

What assets can you purchase? There are a few options, including commercial or residential property and parcel of shares in one company. When considering this path, there are a few factors you must take into consideration, as when using a LRBA the arrangement must satisfy quite a few conditions, including but not limited to:

Two Common Limited Recourse Borrowing Arrangement Mistakes

The Limited Recourse Borrowing Arrangement is a great way for SMSF trustees to gear their investment portfolio for future growth, but it’s important to get the right advice for your needs and circumstances. For more information contact Rita Zappulla at SMSF Strategic Advisors on (07) 4225 5428 or email info@smsfsa.com.au

General Advice Disclaimer - The information provided on and made available through this website does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances.

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