New figures from the ATO show that investing in residential property is finally starting to gain favour with SMSF trustees. Investing in residential property was made more attractive when the ATO issued a ruling that allows improvements, such as a kitchen renovation, to be made to a property funded through a limited recourse borrowing arrangement, provided that the funds for the improvement come from other monies.
Over the year to 30 September 2012, investments by SMSFs in residential property rose from $14.8 billion to $16.3 billion, an increase of around 10%. Admittedly, this growth comes off a very low base, with residential property only representing a tiny proportion of total SMSF assets at around 3.5%.
Where are SMSFs investing?