SMSF loans let your self-managed super fund borrow to buy property, and we can help you arrange one to purchase commercial and business premises through super. If your fund already has a residential SMSF loan, we can also help you review or refinance it. Because refinancing an SMSF loan involves significant costs, it’s rarely worthwhile unless the loan is larger or its interest rate has crept up over the years, so we’ll check the numbers with you first.
The rules changed in 2026. According to the Australian Taxation Office (ATO), if a fund enters a limited recourse borrowing arrangement on or after 10 August 2026 to buy real property, it can only use that borrowing to buy business real property. The change doesn’t affect existing loans, and funds can still refinance them. Because the details are technical, get in touch and we’ll walk you through what’s possible for your fund.
What Are SMSF Loans?
An SMSF loan is a loan your self-managed super fund uses to buy an investment, most commonly a property. The returns, whether rental income or capital growth, flow back into the fund and build your retirement savings over time. Super law generally stops SMSFs from borrowing, so these loans must take the form of a limited recourse borrowing arrangement (LRBA).
How a Limited Recourse Borrowing Arrangement Works
The ATO describes an LRBA as an arrangement where the SMSF trustee borrows to buy a single asset, and a separate holding trust (often called a bare trust) holds that asset in the meantime. Once the fund pays off the loan, it can take legal ownership.
The “limited recourse” part matters. If the loan defaults, the lender can only claim the property held under the arrangement, so the fund’s other assets are protected. However, because lenders carry more risk, many ask members to sign personal guarantees, and SMSF loans often have higher interest rates and fees than standard loans, as Moneysmart points out.
A few rules catch people out. First, the fund must use the loan to buy one acquirable asset, such as a single title. Second, the fund can’t borrow to improve a property it already owns, for example by building on vacant land. Finally, the arrangement has to be consistent with your fund’s investment strategy and trust deed.
Residential and Commercial Property Through Super
Commercial and Business Premises
Business real property generally means land and buildings used wholly and exclusively in a business, such as a warehouse, factory unit, office, shop or medical suite. Funds can still use new LRBAs to buy it. A fund can also lease business real property to a member’s business at market rent, and the ATO confirms a fund can acquire it from a related party at market value. Both must be on arm’s length terms.
Residential Property
Since 10 August 2026, an SMSF generally can’t take out a new LRBA to buy residential property. A fund can still buy residential property without borrowing, and funds can keep or refinance existing residential SMSF loans. Refinancing costs are high, though, so switching usually only pays off for larger loans or where the rate has crept up over time. Even so, strict rules apply: according to Moneysmart, the fund can’t buy the property from a related party, and members or their relatives can’t live in it or rent it.
The Sole Purpose Test
Every SMSF investment must meet the sole purpose test. In other words, the fund must make and maintain it only to provide retirement benefits to members, or death benefits if a member dies. Otherwise, the fund can lose its tax concessions and trustees can face penalties. For example, a holiday in the fund’s property would breach the test, whereas a market-rent lease of business premises to your company is generally allowed.
What Lenders Typically Look At
Only some lenders offer SMSF loans, and their policies differ. In general terms, most will review:
- Liquidity: many lenders want money left in the fund after purchase to cover a vacancy.
- The deposit: SMSF loans usually need a larger deposit than a standard home loan.
- Serviceability: rent from the property plus regular super contributions need to cover repayments and fund costs.
- The property: its type, location, zoning, lease and tenant all affect how a lender views the security.
- The structure: a trust deed that allows borrowing, a holding trust and, with many lenders, a corporate trustee.
- Members: ages, contribution history and personal guarantees.
Costs to Budget For
Buying through super costs more than buying in your own name. Expect advice, setup and legal fees, stamp duty, the holding trust deed, loan application and valuation fees, plus ongoing accounting, audit, property and insurance costs. These come out of your super, so they reduce your balance.
Risks to Weigh Up
- Much of your retirement savings may sit in one asset, so a long vacancy or a fall in value hits hard.
- Property is hard to sell quickly, which can cause problems if the fund needs cash to pay pensions or a death benefit.
- Borrowing magnifies gains and losses, and repayments continue when the property is empty.
Get Advice First: Our Role and Your Adviser’s Role
Ingram Financial arranges the lending only. Whether an SMSF, or borrowing through one, suits you is a financial advice question. So before you apply, speak with a licensed financial adviser or SMSF specialist, your accountant and a lawyer, as the ATO also recommends. Once they’ve confirmed the strategy, we work alongside them on the finance.
How the SMSF Loan Process Works With Us
- Advice and structure: your adviser confirms the strategy, and your accountant or lawyer sets up the trustee and holding trust.
- Assessment: we review the fund’s figures and the property, then compare lenders and outline likely deposit, costs and conditions.
- Contract and application: your lawyer checks the contract is in the right name before you sign, and we lodge the application.
- Approval and settlement: we coordinate the valuation, loan documents and settlement with your advisers.
Shire Business Owners Buying Premises Through Super
In the Sutherland Shire, a common reason to consider SMSF loans is a business owner who wants to own their premises. For example, a trade business in a Taren Point or Kirrawee industrial unit, or a clinic in Caringbah or Miranda, might buy its premises through super and pay market rent to the fund. As a result, the business gains a stable long-term base, and the rent helps the fund grow.
If buying outside super makes more sense, see our commercial loans and business loans pages, or read about our Sutherland Shire mortgage broker service.
SMSF Worked Example: A Business Owner Buys Their Own Premises
Take a hypothetical business owner who ran a successful electrical contracting business and wanted their SMSF to invest in a commercial property while giving the business a long-term base of operations. The SMSF had $240,000 available, most of which it put towards the purchase of a warehouse and office in NSW through a Limited Recourse Borrowing Arrangement (LRBA).
The SMSF bought the property for $500,000. After allowing approximately $25,000 for NSW stamp duty, legal fees, lender costs and other purchase expenses, the total funds required were around $525,000. The SMSF contributed $225,000 of the $240,000 towards the purchase and costs, keeping about $15,000 as a small cash buffer, and borrowed $300,000, resulting in a 60% loan-to-value ratio (LVR) based on the property’s purchase price.
How the Lease Supports the Loan
After settlement, the electrical business leased the property from the SMSF under a commercial lease at market rent of $650 per week (approximately $33,800 per year). That rental income, together with ongoing employer and personal super contributions (subject to contribution caps), helped the SMSF meet its loan repayments and other fund expenses. Depending on the lease terms, many commercial property outgoings may also be payable by the tenant.
As a result, the business gained a secure long-term base without buying the property directly, while the fund earned rent from an established tenant. As with any related-party lease, the rent and terms had to stay at market value, on arm’s length terms.
This example is for illustration only, and figures are rounded. Property values can fall as well as rise, and borrowing inside an SMSF magnifies both gains and losses. As trustee, you’re also personally responsible for meeting your fund’s legal and compliance obligations. This is why getting financial and legal advice alongside your loan structuring matters.
SMSF Loans FAQs
SMSF Borrowing Rules
Generally not for new purchases. The ATO says a fund can only use an LRBA it enters on or after 10 August 2026 to buy business real property. The change doesn’t affect existing residential SMSF loans, and funds can refinance them. It also doesn’t apply where the fund exchanged a binding contract before 10 August 2026.
Yes, if the property is business real property. The lease must be at market rent and on arm’s length terms. Members and related parties can’t live in or rent a residential property the fund owns.
It is a separate trust that holds the property while the loan is outstanding. The SMSF has the beneficial interest and can take legal ownership once the loan is repaid. Your lawyer normally prepares the trust deed.
Costs and Process
It depends on the lender and the property, but SMSF loans usually need a larger deposit than standard home loans. Lenders also look at how much money stays in the fund after purchase. We can confirm current options once we see your fund’s figures.
No. We arrange the lending only. A licensed financial adviser or SMSF specialist and your accountant should confirm the strategy first, and we then work with them on the loan.
The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, fees and charges apply. Consider whether it is appropriate for you and speak to us for advice specific to your situation. Speak to your accountant or tax adviser about tax.
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