In an article for the website Smart Company, Kirsten Robb sheds light on the financial advice unethically offered by real estate agents. It should be noted that property promoters who don’t carry an Australian Financial Services (AFS) license are not eligible to give recommendations on SMSF-routed real estate investments. Yet, this is what’s exactly happening rampantly.
Trustees may be penalized for misuse of SMSF
July has changed a lot many things in the SMSF world, and the new penalty regime intends to put in place SMSF trustees who misuse their Self-managed Super Fund. Across Australia, property promoters are wooing investors to use their existing SMSF to play the property game. They are also cajoling investors to set up an SMSF to invest in properties. Claims of $100,000 tax free amount that such nefarious promoters and agents make could not be more misplaced.
Property promoters can’t offer financial recommendations without AFS license
No two ways that only a licensed financial adviser can give you SMSF recommendation. In fact, if you are nearing your retirement age, you need to be even more cautious about how you invest in real estate. If you buy through your SMSF and fail to attract a tenant or are hit hard by poor cash flow, age-related restraints with contribution may not allow you to put money back into your Super.
You can read the original article here.
More ‘Charterhills’ in store
The collapse of one-stop shop like Charterhill doubly proves that one-size-fits all approach made by companies won’t work. I know many companies who do not look at the hierarchy of the investors and recommend a crammed combination of limited recourse borrowing, SMSF and property. Unless we choose caution over nonchalance, we will have many more Charterhills.
And next time someone advises you to put your SMSF money into real estate, ask him about his AFS license first.