SMSF Property Loans & Limited Recourse Borrowing

A Limited Recourse Borrowing Arrangement (LRBA) is the structure superannuation law generally requires when a Self Managed Super Fund borrows to acquire an asset. The asset is held in a separate holding (bare) trust until the loan is repaid, and the lender’s recourse on default is limited to that single asset rather than the fund’s other assets. LRBAs are specialised and must comply with the SIS Act. This is general information, not a recommendation to borrow inside super.

Some SMSFs may borrow to acquire property through a complying LRBA, but this depends on the fund’s trust deed, investment strategy, superannuation law and the lender’s policy and assessment. It is not available to, or appropriate for, every fund. An enacted change also narrows what a new arrangement can be used to acquire: from 10 August 2026, where the acquirable asset is real property, it must be business real property (see the next question). Whether an SMSF should borrow at all is a personal decision that should be made with licensed financial advice — this page does not provide that advice.

In one sentence: for an LRBA entered into on or after 10 August 2026, real property acquired under the arrangement must be business real property as defined in s 66(5) of the SIS Act — Schedule 5 amends the “acquirable asset” definition in s 67A(2) to that effect. “Business real property” is a technical test, not a synonym for “commercial property”; whether a particular property qualifies turns on the facts and needs legal and licensed financial advice. The provision-level detail — the commencement rule, the transitional carve-outs and the definition — is set out in our technical resource, “SMSF borrowing and business real property: what Schedule 5 changed”. Verified against the Act text on 13 July 2026 (legislation.gov.au/C2026A00049/asmade).

No. Schedule 5 applies only to arrangements entered into on or after 10 August 2026. A pre-commencement arrangement is outside the amendment: maintaining or refinancing a borrowing under it is protected, to the extent the arrangement is for that purpose, and an acquisition under it is protected even if settlement happens afterwards. Schedule 5 contains no divestment requirement, no forced sale and no sunset date. Two cautions: the refinancing protection operates only “to the extent that” the new arrangement maintains or refinances the earlier borrowing, and the Act does not define when an arrangement is “entered into”, so dating one is a question of fact on the documents. Have the arrangement reviewed with your solicitor and licensed financial adviser.

No — that is a misreading of the change, and an important one. Schedule 5 narrows only the borrowing exception, and only for arrangements entered into on or after 10 August 2026. It does not stop an SMSF acquiring real property, including residential property, without borrowing, and it does not amend the sole-purpose test, the s 66 related-party acquisition rules or the in-house asset rules — those continue to apply exactly as before. What has changed is that, for a new borrowing arrangement, real property acquired under it must be business real property. Whether a fund should acquire property at all, with or without borrowing, remains a personal financial product advice question for a licensed adviser.

We cannot tell you that. SMSF borrowing is not suitable for everyone, and whether an SMSF or an LRBA is right for your circumstances is a personal financial product advice question that requires a licensed financial adviser. Eternity Group does not provide personal financial product advice and does not assess SMSF suitability. This page is general information only.

Generally no. Related-party acquisition rules are strict: an SMSF generally cannot acquire residential property from a member or a related party. Limited exceptions exist for assets such as business real property at market value, but the rules are narrow and breaches carry serious consequences. Do not act on a general statement like this — obtain licensed financial advice and legal advice on your specific situation first.

Requirements vary by lender, but commonly include the SMSF trust deed, the investment strategy, the holding (bare) trust deed, fund financial statements and tax returns, trustee and member details, the contract and property details, and evidence of fund cash flow and liquidity. We cannot promise that any particular document or structure will be accepted — what a lender requires and accepts depends on its current policy and its assessment.

An LRBA generally requires a correctly established holding (bare) trust to hold the asset while the loan is on foot. These documents are not a formality and are not a DIY exercise — they should be prepared with appropriate legal advice and must be consistent with the loan and the fund’s structure. Eternity Group does not provide legal advice; the bare trust should be prepared by a solicitor.

No. Eternity Group Accountants provides SMSF accounting and tax services, and mortgage-broking coordination through Eternity Mortgage Solutions. We are not licensed to provide personal financial product advice (that requires an AFSL), and we do not provide legal advice. Decisions about whether to establish an SMSF, whether to invest in property and whether to borrow involve financial product advice — we work alongside, and refer to, licensed financial advisers and solicitors.

No. Approval cannot be guaranteed. All SMSF lending is subject to the lender’s policy and assessment, and lenders assess SMSF borrowers differently from ordinary borrowers. No finance outcome can be promised. We can help organise and present the accounting and lending evidence; the decision rests with the lender.