Question 1

Can my SMSF borrow to buy a property?

Accepted Answer

Yes. Under the Superannuation Industry (Supervision) Act 1993, an SMSF can borrow to purchase an asset using a Limited Recourse Borrowing Arrangement (LRBA). The borrowed money is used to acquire a single acquirable asset, held in a bare trust until the loan is repaid.  Key conditions: • The property must satisfy the Sole Purpose Test (held for retirement benefit) • The SMSF must have a specific borrowing provision in its trust deed • The fund must be able to service the loan from its own resources (rental income + contributions)

Question 2

What properties can an SMSF purchase?

Accepted Answer

An SMSF can generally purchase:  • Residential investment properties, must not be lived in by a fund member or related party • Commercial properties, including business real property, which can be leased to a related party at arm's length market rent • Industrial and retail premises  It CANNOT purchase: • A property you (as a fund member) or a related party intend to live in • Vacant land (cannot be used as security for a borrowing) • Property being developed or substantially renovated using borrowed money

Question 3

What is a Limited Recourse Borrowing Arrangement (LRBA)?

Accepted Answer

An LRBA is the specific structure required when an SMSF borrows to purchase an asset. Key features:  • A bare trust (holding trust) holds legal title to the asset until the loan is repaid • The SMSF holds beneficial interest and receives all income from the asset • The lender's recourse is limited, if the SMSF defaults, the lender can only pursue the asset held in the bare trust, not the other assets of the SMSF  This protects the fund's other assets in the event of default.

Question 4

How much can an SMSF borrow?

Accepted Answer

Most SMSF lenders will lend up to:  • 70–80% LVR for residential property • 65–70% LVR for commercial property  Lenders also typically require: • A minimum SMSF balance of $150,000–$200,000 (varies by lender) • Proof the fund can service the loan from current income • A minimum loan size (often $100,000–$500,000 depending on the lender)  Some specialist lenders have more flexible criteria.

Question 5

What are the tax advantages of SMSF property investing?

Accepted Answer

SMSF property investment can be highly tax-effective:  • Rental income is taxed at 15% in accumulation phase • Capital gains held for over 12 months are taxed at 10% in accumulation phase • In pension phase (fund paying a retirement pension), rental income and capital gains may be entirely tax-free • Interest on the SMSF loan is deductible within the fund  Note: SMSF lending has complexities and you should obtain independent financial advice before proceeding.

Question 6

Do I need a financial adviser for SMSF property lending?

Accepted Answer

We strongly recommend it. Mortgage brokers can assist with the lending component of an SMSF property purchase, but setting up or managing an SMSF requires a licensed financial adviser (or SMSF specialist adviser).  You will also typically need: • An SMSF solicitor (for trust deed review and bare trust establishment) • An SMSF accountant (for compliance, audit and administration) • A financial adviser (for strategy and investment decisions)  We work alongside your adviser and accountant as part of your broader SMSF team.

SMSF Property Loans

How SMSF Property Lending Works

LRBA-Compliant Structure

Residential & Commercial

Tax-Effective Growth

Specialist Lender Panel

The SMSF Lending Process

SMSF eligibility review

Property selection guidance

Bare trust structure set up

Lender submission

Settlement & ongoing compliance

SMSF Lending FAQs

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