You may have heard of people who buy property using their super. The super fund might need to borrow money to purchase the property.
Self-managed superannuation funds can borrow in very restricted circumstances, one of which is through setting up a limited recourse borrowing arrangement.
A limited recourse borrowing arrangement requires the following documents:
- A self-managed super fund to be set up with its own trust deed
- A custodian deed or bare trust deed (which is this document)
- A limited recourse loan agreement
- A lease agreement (if the property is commercial property and being leased back to a business owned by someone who is a member or related to a member of the self-managed super fund).
The property is owned in the name of the custodian. You may need to set up a new company to be the custodian. Speak to your accountant or lawyer to make sure the arrangement is set up properly.
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