In Australia, Self-Managed Super Funds (SMSFs) are allowed to invest in investment homes, under certain conditions. We have plenty to help you across Australia However, there are specific rules and restrictions around SMSF investments in property. .
However, the trustees should carefully consider:
- Compliance with SIS Act: The investment must comply with the Superannuation Industry (Supervision) Act 1993, especially the sole purpose test.
- Liquidity and Cash Flow: Unbuilt properties may have a longer period before they start generating rental income, impacting the SMSF’s liquidity and cash flow.
- Risk: All investments carry risk, and off-the-plan purchases also carry the risks of construction delays.
- Limited recourse borrowing arrangements (LRBAs): If the SMSF is borrowing to purchase the property, it must be structured correctly through an LRBA. There are stringent rules on borrowing within SMSFs.
