SISFA welcomes clarification of borrowing rules
Small Independent Superannuation Funds Association (SISFA) has welcomed the announced clarification of borrowing rules to allow SMSFs with property purchased through limited recourse borrowing to make improvements.
“It is a practical outcome for trustees and allows for greater flexibility in buying property where the opportunity to add value can enhance the retirement outcome for fund members.
“I have found that many trustees wanting a residential investment have had to primarily consider new, ‘off the plan’ residential developments where the need for improvements was not an issue. This practical change will allow for consideration of older properties that can be sensibly upgraded,” said Michael Lorimer, Chair of SISFA.
Industry concerns that trustees might overcapitalise properties under the new rules is not seen as a major issue or borne out by recent investment history.
“When SMSFs started to grow in numbers and the first round of SMSF lending was allowed, we heard howls that trustees would go broke and lose money because they weren’t in proper managed funds. That has simply not been the case and we have seen in ATO figures that SMSF portfolios are similar to standard balanced portfolios. They have not become over geared property portfolios and we can’t see that this practical change in treating property investments will cause any mayhem,” said Mr Lorimer.
