- The property is held in a separate holding trust until the loan is repaid.
- New SMSF loans can only buy business real property. Residential SMSF loans set up before 10 August 2026 can still be refinanced.
- Business owners can lease commercial property to their own business at market rent.
How an SMSF loan works
SMSF loans use a limited recourse borrowing arrangement (LRBA). The property is held in a separate holding trust, sometimes called a bare trust, for the benefit of the fund. If the loan is not repaid, the lender’s claim is limited to that property and the fund’s other assets are protected.
Sign the contract in the right name: The contract must be in the name of the holding trust's trustee, and the trust should be set up before you sign. If the wrong party signs, such as the fund itself or you personally, you may pay stamp duty twice and the lender may not proceed. The duty rules vary by state, so get advice from your solicitor and accountant before you sign.
Key rules
- The property must meet the sole purpose test. It must be held to provide retirement benefits for members.
- Since 10 August 2026, a new limited recourse borrowing arrangement can only be used to buy business real property. Arrangements set up before that date, and refinancing them, aren't affected.
- If your SMSF already owns a residential property, you and your relatives cannot live in it or rent it.
- A business owner can lease commercial property owned by their SMSF to their own business, at market rent and on commercial terms.
- The loan must be used to buy a single asset. It can fund repairs and maintenance, but not improvements that change the character of the property.
What lenders look for
- A maximum LVR that is usually lower than a standard loan.
- Enough liquid assets left in the fund after the purchase, often a set percentage of the fund balance.
- Contributions and rental income that can cover the repayments.
- A correctly set up SMSF trust deed and holding trust.
Costs to factor in
Setting up the holding trust and any changes to the trust deed involve legal costs, and SMSF loans usually have higher rates and fees than standard loans. Ongoing accounting and audit costs also apply to the fund.
Get advice first
Whether to buy property through your SMSF is a financial advice decision. Speak to a licensed financial adviser and your accountant before you proceed. Once you have advice, we can arrange the lending.
Source: Australian Taxation Office. Last reviewed October 2026.
This article is general information only and does not take into account your objectives, financial situation or needs. It is not credit, tax or financial advice. Lender criteria and government schemes change, so check current details and seek advice before acting.