Do understand the basics of SMSF gearing

Superannuation law allows self-managed super funds to borrow to invest provided strict rules are met.

Geared assets must be held in a special trust until payment of the final installment.

And lenders cannot make a claim against any other assets of the super fund – apart from the geared asset – in the event of a default on the loan.

Martin Murden, director of SMSF consulting with the Partners Group in Melbourne, says his firm receives about one serious question a day from people who are interested in gearing through an SMSF.

“This is beyond tyre-kicking,” he emphasises.