SMSF property investors need to review their retirement portfolios to prevent costly fire sales if the total balance exceeds $1.7 million.
Investors in real estate through a self-managed superannuation fund are being warned about a tax trap that could force them into an asset fire sale asSMSFs are believed to hold residential and commercial properties worth more than $140 billion in total.The problem emerges when the amount of a new loan added to the value of other superannuation assets exceeds the $1.7 million SMSF limit, ruling out additional contributions.
But after commencing the loan, Will’s adjusted balance is $1.75 million and Wendy’s is $1.45 million. This means Will is not eligible to make a concessional loan as his total superannuation balance is more than $1.7 million. The value of property in SMSFs also rose by about 22 per cent to a record $140 billion because of rising prices and new investments, the analysis shows.
Think Tank Group, which lends to SMSFs, says its lending to companies – typically small businesses – was almost double the amount compared with residential loans.According to Canstar, which monitors rates, eight lenders increased rates for SMSF loans following last month’s cash rate rise by an average of 26 basis points.
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