Hello Dipak

Thanks for the follow up question.

Just to clarify, where there are two SMSFs, let us call them SMSF A and SMSF B, wanting to purchase a rental property, they can both utilise a Limited Recourse Borrowing Arrangement (LRBA).

However, a key requirement is that the lender in respect of each separate LRBA appreciates that should one of SMSFs default, the lender can in relation to the defaulting SMSF, can only dispose of the defaulting SMSF’s interest in residential property.

As an alternative to directly purchasing an interest in the real estate, each of SMSF A and SMSF B could subscribe for units in a unit trust (as you refer to in another question on the Forum) and the units could be funded in part by each of SMSF A and SMSF B obtaining an LRBA.


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