The SMSF residential property borrowing change is time-sensitive — but the biggest risk is not missing the window. The biggest risk is rushing into a poor-quality transaction without proper advice.
Current reporting indicates new residential SMSF borrowing arrangements will be banned after a commencement window, with existing arrangements expected to be grandfathered. But the exact commencement date, the definition of what is grandfathered, and the compliance requirements for existing LRBAs are all determined by the final legislation.
Before taking any action, SMSF investors should confirm: whether the legislation has passed and received royal assent, the exact commencement date, whether the property is residential or commercial, whether borrowing is actually required, whether the purchase contract has been signed, whether finance has formally been approved, whether the SMSF already exists and is compliant, whether the investment fits the SMSF documented investment strategy, and whether the arrangement is compliant with all existing SMSF rules.
Investors should not rush into poor-quality property just to beat a deadline. The risk of buying the wrong property in the wrong location with the wrong debt structure inside an SMSF is far greater than the risk of missing a legislative window.
Koste can help with property-side reporting, including depreciation schedules, insurance replacement cost and cost base information.
What to do next: