SMSF property loan guidance for eligible borrowers
Explore SMSF property loan options and LRBA lending requirements with careful broker guidance. You should seek financial, tax and legal advice before borrowing through an SMSF.
SMSF Borrowing Explained
What is an LRBA?
A Limited Recourse Borrowing Arrangement (LRBA) allows an SMSF to borrow to purchase a single asset or a collection of identical assets. If the loan defaults, the lender's recourse is generally limited to the asset held in the separate trust, subject to the loan documents and any guarantees given.
Residential vs Commercial
SMSFs can borrow to purchase residential or commercial property. Commercial property can offer more flexibility — for example, it may be leased to a related business at market rates, subject to superannuation rules. Residential property has stricter rules and generally cannot be lived in by a fund member or their relatives.
Single Property Trust
Each LRBA requires a separate trust (often called a bare or holding trust) to hold the title. The trust holds the property, the SMSF makes the repayments, and once the loan is repaid the asset can be transferred to the fund.
Deposit & LVR
Most SMSF lenders require a 20-40% deposit. Maximum LVR is typically 65-70%. We help you compare lending requirements, deposit expectations and product options for eligible SMSF borrowers.
Contribution Strategy
Contribution strategy should be discussed with your accountant or financial adviser. We focus on lending requirements, loan structure and application preparation.
Common questions about SMSF property loans
A Limited Recourse Borrowing Arrangement allows an SMSF to borrow for a specific asset under strict rules. Specialist legal, tax and financial advice is important.
It may be possible, but strict related-party and use rules apply. Members and relatives generally cannot live in the property.
No. We can help with lending options, but SMSF borrowing decisions should be reviewed with a licensed financial adviser, accountant and solicitor.
Many SMSF lenders look for larger deposits than standard home loans, commonly in the range of 20 to 40 per cent. Requirements vary with the lender, the property type and the fund's overall position.
Under LRBA rules, borrowed money generally cannot be used to improve an asset in a way that changes its character, although repairs and maintenance are treated differently. Confirm the details with your SMSF professional advisers.
Considering SMSF property borrowing?
We can help compare lending options while you confirm advice, compliance and fund suitability with your professional advisers.