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Agents must take care when promoting the sale of property for use in a self-managed superannuation fund (SMSF), a specialist at the Institute of Chartered Accountants of Australia (ICAA) has warned.
ICAA superannuation specialist Liz Westover said in a recent blog that she had received a letter from a real estate agent promoting the benefits of property acquisition using current borrowing rules.
“I have to say I was surprised and somewhat alarmed that some of the information provided was technically wrong and misleading, particularly in relation to the tax measures,” she said.
“Furthermore, the information was presented in such a way that it all sounded very straight forward.”
In what was described as a complex process, she said a wide range of factors needed to be considered “not only before entering these borrowing arrangements but also before setting up an SMSF.”
“These factors include costs, risks, returns, responsibilities of operating your own super fund, insurance and your current superannuation savings. As we all know, SMSFs are not the best superannuation option for everyone and they should not be set up simply as a vehicle to borrow to buy real estate.”
“Borrowing can be a valuable tool within an SMSF to bolster retirement savings, but it must be used appropriately and in full knowledge of the facts and all the associated risks.”
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