Multiple Properties Using a Loan

Generally No, but in some situations it can be a yes, you need to look at the facts of the case.

Single Acquirable Asset Rule

Before we looks at some examples you need to understand the rule within one of the sub sections of S67 of the SIS Act that deals with a Limited Recourse Borrowing Arrangement often referred to as a LRBA (“SMSF Loan”) and that rule is the Single Acquirable Asset rule.  This Single Acquirable Asset rule basically means only a single asset can be purchased/repaired using the monies received from the SMSF Loan. 

So can multiple assets be purchased using SMSF Loan Money?

The answer is yes! they can!, provided the assets are the same market value and identical to each other, a simple example is the purchase of 10,000 BHP, or Rio, or NAB, or CBA, or Westpac Shares will be allowable to be purchased using SMSF loan monies. However One SMSF Loan cannot buy BHP & Rio & NAB &CBA & Westpac Shares because the shares are not identical but also probably not of the same value. Only one of the shares eg 10,000 BHP shares could be purchased using SMSF Loan monies.

So can multiple property titles be purchased using SMSF Loan Money?

The answer is generally no, unfortunately. The ATO considers that where a SMSF purchases say three adjacent lots from one or more than one vendor, the ATO considers the titles will not be identical, even if each of the titles are the same price and the same share and size. The reasons are explained by the factors the ATO says you must consider:

• if a law does not require the assets to be acquired together then the assets will be not be separate; and
• and if a physical unifying object is permanent and of significant value then the asset will not be separate. 

When can multiple titles be purchased using SMSF loan money?

When the assets are of the same market value and identical for example:   

• Yes – if a factory was built across two or more titles and the factory was of significant value; or
• No – if the factor was not of significant value
• Yes – if a strata titled apartment with a separate car bay is acquired – a law prevents the car bay be transferred without the transfer as such the apartment and car bay are considered a single acquirable asset
• No – A farm is across three titles and has crops and irrigations and fencing spanning all three titles – the crops, irrigation and fencing are not considered permanent and therefore the three titles are not a single acquirable asset  

See what the ATO says <ATO-Link>.