SMSF property finance enquiries
This page provides general information about how SMSF property borrowing works from a lending perspective. It is not superannuation, financial planning, investment, tax or legal advice.
SMSF property borrowing — general overview
A Self-Managed Superannuation Fund (SMSF) may, subject to its trust deed, investment strategy, and compliance requirements, be able to borrow to purchase a property asset. This is done through a Limited Recourse Borrowing Arrangement (LRBA).
SMSF borrowing is regulated under the Superannuation Industry (Supervision) Act 1993 (Cth) and is subject to ATO guidance and ruling. It is not a straightforward transaction and involves multiple professional advisers working together.
Whether SMSF property borrowing is appropriate for any particular fund is a question that can only be answered by a licensed SMSF financial adviser with knowledge of the specific fund, its members, and their financial circumstances. Obtain Finance does not make this assessment.
LRBA lending structure — plain English
An LRBA works differently from a standard home loan:
Bare trust structure
The property is not held directly by the SMSF. It is held by a separate bare trust (holding trust) until the loan is fully repaid. Once repaid, the property is transferred to the SMSF.
Limited recourse
If the SMSF defaults on the loan, the lender's recourse is limited to the asset held in the bare trust. They cannot pursue other SMSF assets. This protects the rest of the fund's assets.
Single acquirable asset
Each LRBA can only hold a single acquirable asset. An SMSF cannot borrow to purchase a portfolio of assets under one arrangement.
Lender requirements
SMSF lenders assess the fund's ability to service the loan from rental income, member contributions, and existing fund assets. Requirements vary significantly by lender.
Deposit and liquidity considerations
SMSF lenders typically require larger deposits than standard home loans — commonly 20–30% or more of the property purchase price, depending on the lender and property type. After the purchase, the fund must also maintain sufficient liquid assets to meet member benefit payments, contribution obligations and ongoing expenses.
Liquidity is a significant consideration in SMSF property borrowing. If the fund becomes illiquid, it may have difficulty meeting member payment obligations. This is a matter for your SMSF adviser and accountant to assess.
Finance support
Enquire about SMSF property finance.
Tell us about the property and your SMSF situation — a broker can outline the credit assistance options, subject to lender policy and assessment. Independent advice is required.
Residential vs commercial property
SMSFs can, subject to eligibility, use an LRBA to purchase either residential or commercial property. There are different lender and regulatory considerations for each:
Residential property
- Cannot be lived in by members or related parties
- Fewer SMSF lenders available
- Higher deposit requirements
- Standard SMSF LRBA structure applies
Commercial property
- May be leased to a related party on arm's length terms (seek legal advice)
- Business premises purchase is a common use case
- More SMSF lenders active in commercial space
- Related-party lease requires specific compliance steps
General information only. All SMSF property decisions must involve independent legal, tax, and SMSF advice. Read more about SMSF commercial property finance →
Why independent advice is required
SMSF property borrowing involves multiple regulatory frameworks, tax consequences, and compliance requirements. A broker can assist with the lending component only. Before proceeding you should obtain:
Related guides
Discuss SMSF property finance with a broker.
SMSF property borrowing involves a specific lending structure, compliance requirements, and lender assessment criteria. Obtain Finance provides credit assistance only. Seek independent advice from a licensed SMSF adviser, accountant and solicitor.
General information only. Credit assistance only. Subject to lender policy and credit assessment. Seek independent superannuation, legal and tax advice.
General advice warning: This information is general in nature and does not constitute personal financial or credit advice. Figures shown are indicative only — not guaranteed. You should consider your own circumstances and consult a qualified mortgage broker or financial adviser before acting on any information on this page. Michael Short (Credit Representative 468493) operates under Australian Credit Licence 389328.