Borrowing and Limited Recourse Borrowing Arrangements
SMSF, generally, are not allowed to borrow money. A limited recourse borrowing arrangement is an exception. Borrowing and Limited recourse are when an SMSF borrows money to buy an asset. Here, if the SMSF defaults on the loan, the right of the lender is limited to the recovery of the asset, keeping the other SMSF assets protected. A careless investment decisions might postpone a retirement.
Before buying properties, work with an advisor and the bank to meet strict rules required by limited recourse borrowing arrangements. Be sure that you understand the rules and talk to us on 03 9404 2737 and ask for Julius Mather SMSF Auditor