Thinking of buying a property with a self-managed super fund?

This is a very complex strategy that requires an expert.

Good thing we have a team of experts that are specialised and know just how to guide you to a SMSF loan. We have access to almost all Lenders that provide SMSF loans.

Stanford Financial brings genuine understanding of the compliance requirements alongside our 60-plus lender panel and national coverage. We work with the specialist non-bank lenders who fill the gap left by the big four, and we coordinate the moving parts of your SMSF loan application so nothing falls through the gaps between advisers.

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How a SMSF structure works in practice

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When your SMSF borrows to buy a property, the property is not held directly by the SMSF during the loan period. Instead it is held by a separate entity called a bare trust, also called a holding trust or custodian trust.

The bare trust holds legal title to the property while the loan is outstanding. The SMSF holds the beneficial interest, meaning it receives all the income and capital growth. Once the loan is fully repaid, legal title transfers from the bare trust to the SMSF directly.

This structure exists because superannuation law does not allow an SMSF to directly own an asset that is subject to a charge or encumbrance which is what a mortgage is. The bare trust resolves this by holding the asset separately until the debt is cleared. The SMSF repays the loan using the fund’s income including rental income from the property, employer contributions, member contributions, and other SMSF cash reserves. Repayments cannot come from outside the fund.

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What is an SMSF loan?

An SMSF loan is technically called a limited recourse borrowing arrangement or LRBA.

It is the legal mechanism by which a self-managed super fund borrows money to purchase a single asset, typically a residential or commercial property.The term “limited recourse” is the critical distinction from a standard property loan. In a standard mortgage, if you default the lender can pursue your full personal estate.

In an LRBA, the lender’s recourse is limited to the specific asset purchased with the loan. If the SMSF defaults, the lender can only take the property, they cannot touch the other assets in the fund. This protects the broader retirement savings of the fund members, which is why the ATO permits this structure within the superannuation framework.

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QUESTIONS

Frequently asked questions

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What is an SMSF loan?

An SMSF loan is a limited recourse borrowing arrangement (LRBA), the legal structure by which a self-managed super fund borrows to purchase a single asset, typically property. The property is held by a bare trust during the loan period and transfers to the SMSF once the loan is repaid. The lender’s recourse is limited to the asset purchased as they cannot pursue other SMSF assets if the fund defaults.

Can I use my super to buy an investment property?

Yes, but only through a self-managed super fund. You cannot use a retail or industry super fund to borrow and buy property. If you are in a retail or industry fund you would need to establish an SMSF, roll your existing super into it, and then arrange an LRBA. The property must be held as an investment and comply with the sole purpose test, personal or family use is not permitted.

How much deposit does an SMSF need to buy property?

For residential property most lenders require a minimum 20–30% deposit (70–80% LVR). For commercial property the deposit is typically 30–40% (60–70% LVR). In addition to the deposit, the fund needs to cover stamp duty, legal fees, bare trust establishment costs, and maintain a cash buffer after settlement. Most lenders also require the fund to hold a minimum total balance of $200,000 to $300,000 before they will consider an LRBA application.

What SMSF loan interest rates can I expect in 2026?

SMSF loan rates are typically 1.0% to 1.5% higher than standard investment property loans, reflecting the limited recourse structure and reduced lender pool. As of April 2026, variable rates on residential SMSF loans range from approximately 6.5% to 7.5%. Commercial SMSF loans range from approximately 6.25% to 8.5% depending on the asset type and lender. The big four banks no longer offer SMSF loans, the market is served by specialist non-bank lenders and some regional lenders.

Can my SMSF buy a commercial property and lease it to my business?

Yes. This is one of the most tax-effective uses of SMSF borrowing and is permitted under the related party rules for business real property. Your business pays market-rate rent to the SMSF, which is taxed at a maximum of 15% in accumulation phase or 0% in pension phase. The lease must be a genuine commercial lease at documented market rates. Residential property cannot be leased to related parties under any circumstances.

What is a bare trust in SMSF property?

A bare trust (also called a holding trust or custodian trust) is the legal entity that holds title to the property while the LRBA is in place. The SMSF cannot directly own a property subject to a mortgage under superannuation law, so the bare trust holds legal title on behalf of the SMSF. Once the loan is repaid, legal title transfers from the bare trust to the SMSF. The bare trust deed must be correctly drafted at the time of purchase as an error here can cause double stamp duty or compliance breaches.

Can I live in a property owned by my SMSF?

No. The sole purpose test requires the SMSF to be maintained solely for retirement benefit purposes. You cannot live in an SMSF property, your family members cannot live in it, and it cannot be rented to related parties at below-market rates for residential property. Breaching the sole purpose test can result in the fund losing its complying status and significant tax penalties.

Which lenders offer SMSF loans in Australia?

The major banks (Commonwealth Bank, Westpac, NAB, and ANZ) no longer offer SMSF loans to new customers. The market is served by specialist non-bank lenders including loans.com.au, Firstmac, Liberty Financial, WLTH, and others, alongside some regional banks and credit unions. There are fewer than 20 active SMSF lenders in Australia compared to hundreds of lenders in the standard residential market. Stanford Financial has access to the specialist lender panel and can identify the most suitable options for your fund’s situation.

Buying property through a SMSF loan?

Thinking of buying a property with a self-managed super fund?

How a SMSF structure works in practice

What is an SMSF loan?

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