Call to tighten SMSF property rules
Accounting and advisory firm William Buck is calling for more stringent regulation around the inclusion of residential property in self-managed super funds (SMSF).
It comes as investors take advantage of a booming property market and place billions of dollars of residential property into SMSFs.
"Considerable caution must be exercised around the inclusion of this asset class because its general investment characteristics are low income-producing and unpredictable capital gains," William Buck wealth advisory director Fausto Pastro said.
Pastro believes investors should take a balanced approach to investments and dabble in bank term deposits and bonds, along with more risky assets such as shares and property.
But he warned that including risky assets in SMSFs is a decision that should be made based on the individual investor and their risk appetite.
Pastro also warned banks should be careful when lending to SMSF investors who plan to invest in residential property.
"The level of investment activity in the residential property industry in the past 18 months has significantly increased. Within this context, it is important that those advising investors regarding the purchase of residential property for inclusion in SMSFs are appropriately regulated," he said.
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