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Gadens cautious on SMSF loans

Gadens cautious on SMSF loans

While the government has yet to issue a formal response to the Financial System Inquiry, a partner in one major Asia Pacific law firm believes changes are on the horizon for SMSF borrowing and is cautious about advising on new LRBAs.

Gadens partner Kathleen Conroy told Mortgage Business' sister publication SMSF Adviser that she believes the government will place restrictions on the purchase of residential property by “mum-and-dad” SMSF investors, but will leave the current commercial property allowances untouched.

“I think they basically want to get out of the system all those people who are literally opening the fund the same day as they’re signing the contract,” Ms Conroy said.

'“You’ll always get people who don’t conduct their funds properly, but hopefully once they tighten up a little on the borrowing, you won’t get as many people opening funds who simply don’t have the money to do it.” 

Ms Conroy added she is warning clients that she cannot say with “any certainty” that the current borrowing options will be available for the foreseeable future.

“You really do have to go into it with your eyes open; don’t just think, ‘that’ll be ok, this has been around for years now’, because it is going to change. In circumstances where you can’t say to a client, ‘these are what the changes are’, you have to say, ‘well, there is a risk’.”

Gadens cautious on SMSF loans
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