Quick Answer
An SMSF property loan, formally a Limited Recourse Borrowing Arrangement (LRBA), lets your Self-Managed Super Fund borrow to purchase property. Since 10 August 2026, new LRBAs are only available for commercial property, new residential borrowing is banned (existing residential LRBAs are grandfathered, and your fund can still buy residential property outright with cash). The property is held in a separate bare trust until the loan is repaid. Most lenders require a minimum SMSF balance of $200,000 and a 30-40% deposit on commercial purchases. Rental income flows into the fund at a 15% tax rate, and capital gains held for 12+ months are taxed at 10%, falling to zero in pension phase.
New Residential LRBA Borrowing Is Banned From 10 August 2026
SMSFs can no longer take out a new Limited Recourse Borrowing Arrangement to buy residential property. Commercial property LRBAs are completely unaffected, this page now focuses on commercial SMSF lending. Your fund can still buy residential property with existing cash, and any LRBA already in place before the ban continues under grandfathering. See our full guide to the ban or try our SMSF commercial property calculator.
Important: Seek Professional Advice
SMSF property investment involves complex regulations. Before proceeding, ensure you work with qualified professionals including an SMSF accountant, financial adviser, and SMSF specialist solicitor. We help with the finance component and can refer you to trusted professionals for other aspects.
Residential vs Commercial SMSF Property
Residential Property
New LRBAs Banned- New LRBA borrowing banned from 10 August 2026
- Fund can still buy outright with cash (no loan)
- Existing pre-ban LRBAs continue, unaffected
- Must be leased to unrelated tenants
- Lower rental yields (2-4%)
- Cannot be used by fund members
Commercial Property
LRBAs Available- New LRBA borrowing fully available, unaffected by the ban
- Offices, retail, industrial, warehouses
- Can be leased to your own business (at market rent)
- Typically 30-40% deposit, up to 70% LVR (80% via select lenders)
- Higher rental yields (5-8%)
- Your business can pay rent to your super
Key SMSF Loan Requirements
SMSF Trust Deed
Your trust deed must allow borrowing for property investment. Many older deeds need updating.
Bare Trust Structure
The property is held in a separate bare trust (or holding trust) until the loan is fully repaid.
Single Acquirable Asset
Each loan can only be used to purchase one property. You cannot borrow to buy multiple properties with one loan.
Investment Purpose
The sole purpose must be to provide retirement benefits for members. Personal use is prohibited.
Who Is This For?
SMSF trustees looking to invest in property
Individuals with substantial super balances ($200k+)
Those seeking tax-effective property investment
Business owners wanting to purchase their premises through SMSF
Investors diversifying their retirement portfolio
How We Help
Navigate complex SMSF lending requirements
Ensure your loan structure is ATO compliant
Calculate borrowing capacity based on your super balance
Access specialist SMSF lenders with competitive rates
Coordinate with your SMSF accountant and solicitor
Example: Commercial Property Purchase
The Situation
- • Business owner with $350,000 in SMSF
- • Currently paying $4,000/month rent for business premises
- • Wants to buy the property for $800,000
The Solution
- • SMSF borrows $560,000 (70% LVR)
- • SMSF contributes $240,000 deposit + costs
- • Business pays $4,000/month rent to SMSF
- • Rent builds super balance instead of paying landlord
Result: Over 15 years, the loan is paid off using rental income. The business owner now owns a valuable commercial property inside their super, with significant tax advantages.
Our SMSF Loan Process
SMSF Readiness Check
We review your SMSF structure, trust deed, and super balance to confirm eligibility.
Borrowing Capacity Analysis
We calculate how much your SMSF can borrow based on your fund's balance and cash flow.
Lender & Property Matching
We find lenders who specialize in SMSF loans and meet the property requirements.
Settlement & Compliance
We coordinate with all parties to ensure a smooth, compliant settlement.
Typical SMSF Loan Costs
Establishment Costs
- • Loan application fee: $600-$1,500
- • Bare trust setup: $1,500-$3,000
- • Legal review: $1,000-$2,500
- • Valuation: $300-$600
Ongoing Costs
- • Loan interest (7.50-9.00% typical, commercial)
- • Bare trust annual fee: $200-$500
- • SMSF audit (annual): $500-$1,500
- • SMSF accounting: $2,000-$4,000/year
Property Costs
- • Stamp duty (varies by state)
- • Building & pest inspection
- • Insurance
- • Rates & maintenance
Frequently Asked Questions
Can my SMSF still borrow to buy residential property in 2026?
No. Since 10 August 2026, SMSFs can no longer enter into a new Limited Recourse Borrowing Arrangement to buy residential property. Your fund can still buy residential property outright using existing cash, just not with a new loan. Any residential LRBA already in place before 10 August 2026 continues under grandfathering. Commercial property LRBAs are completely unaffected.
What is an SMSF property loan?
An SMSF property loan allows your Self-Managed Super Fund to borrow money to purchase commercial property. These loans are structured as Limited Recourse Borrowing Arrangements (LRBAs), meaning the lender's recourse is limited to the property itself, not other SMSF assets. New LRBAs for residential property have been banned since 10 August 2026.
How much deposit does my SMSF need?
For a commercial property LRBA, most lenders require a minimum 30-40% deposit, plus funds for stamp duty, legal fees, and establishment costs. Your SMSF typically needs a balance of at least $200,000 to make an SMSF property purchase viable.
Can I buy a residential property to live in through my SMSF?
No. The property must be solely for investment purposes and cannot be lived in by you, your relatives, or any fund members. It must be leased at market rates to an unrelated party. On top of that restriction, a new residential purchase can no longer be financed with a new LRBA since 10 August 2026, it would need to be bought outright with fund cash.
What's the difference between residential and commercial SMSF loans now?
Commercial SMSF loans (LRBAs) remain fully available and can be used to purchase business premises that you or a related party operates from, at market rent. Residential SMSF loans no longer exist for new purchases, new LRBA borrowing for residential property was banned from 10 August 2026. Existing residential LRBAs from before that date continue unaffected.
What are the interest rates for SMSF commercial loans?
SMSF commercial loan rates are typically higher than standard investment loans due to the additional complexity and risk for lenders. Rates currently range from approximately 7.50% to 9.00% per annum depending on the lender, property type, LVR, and fund profile.
Can I renovate an SMSF property?
You can make repairs and maintenance, but significant improvements or renovations that change the character of the property are restricted while there's a loan in place. The property must remain "substantially the same" as when purchased.