Mentor Financial Services

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Borrowing within self managed super funds

In September 2007, new laws came into effect that permits a self-managed super fund to invest in an instalment warrant issued over any asset that an SMSF can invest in directly.

Among other things, this has had the effect of allowing an SMSF to borrow and purchase investment property. The fund must enjoy a right (but not an obligation) to acquire the legal ownership of the asset through the payment of instalments.

The trustee of an SMSF needs to understand the risks associated in any form of gearing. In rising markets, you will accumulate wealth at a much faster rate because you have access to the returns on more assets. However, in falling markets your losses will be amplified.

Please speak to one of the team at Mentor before engaging in any borrowing within your self managed superannuation fund.

Financial Services - Superannuation

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