With all the hoopla surrounding SMSF loans, you might be wondering if now is a good time to borrow funds from your SMSF for investment purposes.
You are probably aware of the ongoing debate whether the Australian government should put a ban on SMSF lending arrangements or not. Proponents who support SMSF lending believe that SMSF loans have the potential to help SMSF trustees maximise their fund’s investment capabilities.
An industry divided
In a recent survey of SMSF brokers, 21.9 per cent believe that halting SMSF loans will have a minor impact on the SMSF market, while 11.7 per cent say that a moderate impact is to be expected. Fourteen per cent of the brokers, however, are adamant that the banning of SMSF loans will impact the industry in a very significant way.
Many leading SMSF lending institutions are already making preparations if the government will ultimately scrap SMSF loans. However, not all believe that SMSF lending will be scrapped.
Financial experts and SMSF advisers who support SMSF borrowing believe that the government will apply changes to the borrowing policies, like limiting the loan to commercial property investment or weeding out spruikers and advisers who give wrong recommendations, but not totally eliminate it from the landscape.
Make Your Move
The current SMSF scenario is something that will put you in a “let’s-wait-and-see-what-happens” mode.
However, experts believe that SMSF lending is instrumental to diversifying the investments of an SMSF vehicle. While the situation concerning SMSF loans is a bit frightening for any trustee, brokers and even banks are urging everyone to take advantage of SMSF lending while it still exists.
That being said, you should base your decisions and actions on a sound investment strategy and with the guidance of a certified SMSF adviser.
There is nothing wrong if you consider SMSF lending at this point in time and optimize the opportunity presented now. But be aware of the probable changes that might occur and be sure that you always have a back plan for everything.
