#8970
Awan Hammad
Participant

    Hi SP

    Yes a SMSF could have a property with 2 loans under a LRBA (if the SIS rules are followed).

    My view is 1 bare trust will be sufficient given the lender or lenders does not sign the bare trust deed. A bare trust is required for each “single acquirable asset”.

    Re the registration of the mortgage it is not a SIS requirement that this be done. A bank / unrelated party will normally always require a mortgage over the property. Re a related party lender they in effect have to have a mortgage over the property due to PCG 2016/5 – “Income tax – arm’s length terms for Limited Recourse Borrowing Arrangements established by self-managed superannuation funds” that states:

    “Security – A registered mortgage over the property is required.”

    If a related party lender does not have a mortgage registered on the property re the LRBA the “safe harbour” terms will not have been met and there is a risk that income from the property could be treated as not at arm’s length & be NALI (non-arm’s length income) and be taxed at 45%..

    I recommend that they get legal advice re the proposed LRBA and the paperwork and mortgages required.

    Thanks

    SMSF AAA

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