The number of SMSFs investing in property via a limited recourse borrowing arrangement (LRBA) has continued to decline, while the value of assets held within those arrangements has grown, according to new ATO data.
The “SMSF annual statistics overview 2023-24” released last week stated the proportion of SMSFs reporting LRBAs as at 30 June 2024 was 11.3 per cent, down from 11.5 per cent in 2022/23 and 12.1 per cent in 2019/20.
At the same time, assets owned through LRBAs were worth $67.2 billion in 2023/24, up from $64.7 billion in 2022/23 and $53.2 billion in 2019/20. However, the total value of all SMSF assets held by LRBAs fell slightly to 6.7 per cent, down from 7.1 per cent in 2022/23 and 7.5 per cent in 2019/20.
The statistics reflected around 12 per cent of SMSFs had total borrowings of $25.8 billion, which was 2.6 per cent of the total value of SMSF assets, and 97 per cent, or $25 billion, of the total value of borrowings was for LRBA assets.
The ATO said in the overview “the growth in the value of property held by SMSFs is attributed to the rising value of Australian real property”.
The report added: “The overall level of SMSF investment in real property, both directly and through LRBAs, increased to $219.5 billion in 2023/24, up from $211.9 billion in 2022/23.
“Total SMSF investment in residential real property, both directly and through LRBAs, was $92.3 billion in 2023/24, representing 0.8 per cent of the total Australian residential property market of $10,912 billion.”
Direct investment in non-residential real property was $100.3 billion in 2023/24, while direct investment in residential property investment was $53.9 billion in the 2024 financial year.
The regulator noted, of the $67.2billion of assets held under LRBAs, 97 per cent, or $65.3 billion, was related to real property and split between residential at $38.5 billion, or 57 per cent, and non-residential real property at $26.9 billion, or 40 per cent.
Most SMSFs employing an LRBA held one property (86.8 per cent), while 8.6 per cent held two properties and 1.7 per cent held three or more, with 3 per cent reporting they had no properties.
