Steve Harker CEO of Morgan Stanley in Australia is concerned by the vigour with which investors are borrowing money to buy property through their SMSF's. Harker says the current tax system and culture encourages investment in property effectively allowing people to take a triple bet. They own their own home, which is capital gains tax free. They can also negatively gear investment properties to the point where it eliminates all income from other sources and now people can gear their self-managed super funds into property. It is the third leg of this triple play that has Harker most concerned and he believes Australia is facing a wreck in the SMSF space in the next 5 - 10 years. The losses, he says, won't be triggered by a collapse in the property prices, but by the proliferation of unviable property schemes that are now being peddled. (VIEW LINK)
I have 13 years experience in equity markets and financial media. In 2013 I Co Founded, Livewire Markets with Tom McKay. Our vision is to be the #1 source of investment ideas in Australia. Opinions expressed are my own.