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SMSF property loan paid off? What next?

Garth McNallyGarth McNally

If you are an SMSF trustee who has borrowed money through your fund to acquire an asset, then you may be wondering what happens when that loan is paid off. And you are not alone.

Over 10% of all SMSFs have used a limited recourse borrowing arrangement (LRBA) at some stage, and many of these loans are now coming to an end.

Background to LRBAs

The limited recourse borrowing rules allow an SMSF to borrow money to purchase a ‘single acquirable asset’ that is held on trust for the SMSF.

The trustee of the holding trust is the legal owner of the asset and the SMSF trustee is the beneficial owner.

Once the loan has been repaid in full, the SMSF trustees have a right to acquire the legal ownership of the asset.

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About the author

Garth McNally
Garth McNally
Garth has worked in the Australian Superannuation industry for over 20 years with a specific focus on self-managed super funds. He provides ongoing support and training to individuals as well as to professionals working in the superannuation area, including advisers, accountants and lawyers. He is a regular contributor to industry publications and to the leading professional bodies including Chartered Accountants Australia & New Zealand (CA ANZ).
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