Question: I have a client named Glen. Glen has come to me asking how his SMSF can obtain finance to acquire a commercial property. Glen proposes that using the exception for warrant trusts, he will simply draw down against his home equity and lend his SMSF $100,000. Together with a bank loan of $500,000, the SMSF will be able to acquire the commercial property. The SMSF will gradually repay the bank loan. Glen proposes to forgive the debt owed to him when the asset is eventually transferred from the security trust into the SMSF.
Does Glen's proposal work?
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