The increase in the use of LRBAs to buy property in an SMSF has been aided by the recent number of official interest rate rises.

SMSFs using a Division 7A loan to fund a LRBA can meet lending requirements of tax and super law by ensuring the appropriate safe harbour rules are followed.

Financial advisers should still warn clients about the risks of LRBAs despite a recent report stating they were relatively safe.

A new report shows LRBAs pose little risk to SMSFs, but sound regulation and specialist advice are crucial to their successful use. 

SMSF practitioners should be looking at the interest rates on clients’ LRBAs as many may be suitable for refinancing at lower rates.

The SMSF Association has welcomed news that LRBAs pose little risk to the superannuation system, pointing to reforms that have reduced risk.

LRBAs don’t pose risks to the super system but issues may arise at the individual SMSF level due to high assets concentrations via borrowings.