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Information required for audit

What auditors look at with SMSF limited recourse loans?

Every SMSF needs to be audited by an appropriately qualified auditor every year. With the increased number of SMSF trustees looking to purchase property using the limited recourse borrowing opportunity, the obvious question is:

“How will a limited recourse borrowing impact on the audit of my SMSF?”

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Can you renovate a property purchased under a SMSF limited recourse loan?

Can a SMSF renovate a property that has been purchased under a limited recourse loan arrangement?
Following the changes made to the super borrowing laws that came into effect on the 7th of July 2010, one of the major items which both investors and advisers have been chasing clarification on is whether a property can be renovated when purchased under such an arrangement.

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Example 2

SMSF limited recourse borrowings from related parties

Utilising a loan from a related party of the SMSF instead of, or in addition to, can provide the following advantages when compared to obtaining a limited recourse loan from a bank:

Reduced upfront costs, reduced ongoing costs, flexible repayment terms, interest is paid to a related party rather than banks with multi-billion dollar profits, younger SMSF members can inject capital to purchase property without it being trapped until they retire, high value assets can be transferred to a SMSF without exceeding the contribution caps and tax deductible contributions can be spread over a number of years and the ability to correctly and legally develop property within a SMSF using borrowings.

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ATO provides further guidance on SMSF borrowing rules

The ATO has recently released a series of interpretative decisions about SMSFs using limited recourse loans to acquire investments such as residential and commercial investment properties.

This article gives a brief plain English summary of what each ruling is about and the impact it has on investors looking to use their super to buy property.

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buying property with super – better than negative gearing?

Is buying an investment property with your super better than negative gearing?

Using negatively geared property has been a favourite strategy of Australians trying to build wealth for a long time – but is this strategy still the best option now that you can use your super as the deposit to acquire both residential and commercial property?

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