ATO releases long-awaited LRBA guidance
Professionals are scrambling to ensure SMSF trustees are compliant with new rules which are touted as “kiss of death” for some related party loans. The key pieces for property loans are quoted below or you can read the full article by clicking on the link.
“On interest rates for real property, for example, the guidance says that they may be fixed or variable, and the 2015-16 rate of 5.75 per cent may be used for LRBAs in existence upon publication of these guidelines, if the total period for which the interest rate is fixed does not exceed five years.
Loan-to-value (LVR) ratios are also critical. The guidelines prescribe 70 per cent LVR for property, and 50 per cent LVR for shares and managed funds.
Further, the guidelines prescribe a 15-year maximum loan term for property, and seven years for shares and managed funds.”