Awan Hammad

    Hi CV

    Yes I agree that if a SMSF borrowed via a LRBA to purchase vacant land they could not build on that land (whilst the LRBA is in place) as that would be an improvement that would normally make the land a different asset.

    Refer “SMSF 2012/1 SMSF’s: LRBA’s – application of key concepts” for more details.

    Re the 50 / 50 tenants in common & a SMSF having a LRBA I have not come across this before and assume it will be difficult as the lender will want to take security over the whole property.

    I expect lenders will not like the arrangement given the legal issues. If other members have experience with this issue please let the forum know.

    It may be possible to do it via a related party LRBA. My concern would be does the related party lender meet the safe harbour requirements if it is likely that an unrelated lender would not allow such a loan.

    If the SMSF is to consider it further they should get legal advice. I also note that a similar question was raised previously and there was concern that it would not be the purchase of a single acquirable asset & that a private ruling should be obtained.




    New to this site? Sign Up

    We have upgraded our website for a better experience.

    Because of this upgrade, all members need to change their password to access their account by clicking the Forgot Password button below.

    Thank you and we look forward to your continued support!