SMSF — Property lending
SMSF Property Loans & Limited Recourse Borrowing
General information for SMSF trustees considering property borrowing through a Limited Recourse Borrowing Arrangement — how lender assessment, fund accounting records, compliance documents and legal structure need to line up, coordinated under one roof. This is not a recommendation to borrow inside super; SMSF borrowing is not suitable for everyone.
- SMSF trustees
- LRBA structure
- Bare / holding trust
- Lender assessment
- Records alignment
Self Managed Super Funds are not for everyone. SMSF rules are complex and trustees are personally responsible for compliance with superannuation, tax and investment laws. Establishing and running an SMSF involves trustee duties, ongoing administration, audit and reporting costs. Information on this page is general only — seek personal advice based on your circumstances before establishing or changing an SMSF strategy.
The general picture
What an SMSF property loan and an LRBA are.
A high-level explanation only. SMSF borrowing is specialised, tightly regulated, and not suitable for everyone.
Where a Self Managed Super Fund borrows to acquire an asset, superannuation law generally requires the borrowing to be a Limited Recourse Borrowing Arrangement (LRBA). 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 — not the fund’s other assets.
This page does not recommend that any fund borrow inside super, and it is not a statement that an LRBA is appropriate for you. Whether an SMSF should hold property at all, and whether it should borrow to do so, is a personal decision that depends on the fund, the members, the trust deed and the investment strategy — and it is a matter for licensed financial advice. The purpose of this page is narrower: to explain how the lending side, the SMSF accounting records and the legal structure need to align, and how Eternity Group can coordinate the accounting and mortgage-broking side of that.
Structure & limits
What an LRBA does and does not allow.
The structural rules are specific. The points below are general information — the detailed rules sit with the SMSF compliance and property-rules pages, and licensed advice applies.
Limited recourse
Lender recourse limited to the one asset
On default, the lender’s recourse is limited to the asset held in the holding trust, not the fund’s other assets. This is the defining feature of an LRBA and shapes how lenders price and assess the loan.
Single acquirable asset
One asset per arrangement
An LRBA must be used to acquire a single acquirable asset (or a collection treated as one). It is not a general-purpose facility, and it is not the same as an ordinary investment loan that can be drawn and redrawn.
Separate holding (bare) trust
Asset held on trust until repaid
The asset is held by a holding (bare) trustee on trust for the SMSF until the loan is repaid. The holding-trust and loan documents must be correct and consistent with each other. These documents are not a formality and should be prepared by a solicitor.
Restrictions on changes
No improvements that change the asset
Borrowed money generally cannot be used to improve the asset in a way that changes its character, and the asset cannot be replaced except in limited circumstances. Repairs and maintenance are treated differently from improvements.
Related-party rules are strict
Narrow exceptions only
Related-party and arm’s-length rules are strict and the exceptions are narrow. Related-party LRBAs must also be on arm’s-length terms to avoid non-arm’s-length income consequences.
Residential property limits
Cannot acquire from a related party
Residential property generally cannot be acquired or transferred from a member or related party into an SMSF. Limited exceptions exist for assets such as business real property at market value, but the rules are narrow.
The detailed restrictions are explained in our general guides — see SMSF property: what you can and can’t do and SMSF compliance & contribution rules. Do not rely on this summary alone.
Documents & parties
What needs to be in place — and who is involved.
An LRBA pulls together several documents and several professionals. The accounting, the legal structure and the lending evidence all reference each other, so they need to be consistent.
SMSF trust deed
Must permit borrowing
The fund’s deed needs to permit borrowing and the LRBA structure. The deed is reviewed before anything proceeds.
Investment strategy
Must support the acquisition
The documented strategy needs to address the concentration, liquidity and diversification effects of a borrowed property — see the investment-strategy page.
Holding (bare) trust deed
Prepared by a solicitor
The holding-trust deed and the loan documents must be correct and consistent. This is legal work; Eternity Group does not provide legal advice.
Trustee / borrower structure
Corporate trustee considerations
Lenders have policies on trustee and borrower structure (for example, a corporate trustee). The structure must satisfy both superannuation law and lender requirements.
Contract & property details
The single acquirable asset
The purchase contract and property details must align with the holding trust and the loan, and the asset must be one the fund is permitted to acquire.
Fund financials & tax returns
Evidence of the fund position
Fund financial statements, the SMSF annual return and member balances form part of the evidence a lender reviews. They need to be current and reconciled.
Lender documents
Application & policy requirements
Each lender has its own application pack and policy. What is required, and what is accepted, varies considerably by lender.
Solicitor & licensed adviser
Where appropriate
A solicitor for the bare-trust and property documents, and a licensed financial adviser for the suitability decision, are engaged where appropriate. We coordinate around them.
The lending side
What lenders assess for an SMSF loan.
SMSF lending is assessed differently from ordinary borrowing. Approval is subject to the lender's policy and assessment, and approval cannot be guaranteed. The factors below are general and vary by lender.
Fund cash flow & contributions
Lenders look at the fund's income — rent plus member contributions — and the pattern and reliability of contributions, to test whether the loan is serviceable from within the fund.
Liquidity & reserves
Funds must hold enough liquidity to meet loan repayments, expenses, insurance and (later) pension payments without being forced to sell the property. Liquidity is a core SMSF-lending concern.
Rental income assumptions
Lenders apply their own shading and assumptions to projected rent. The fund cannot rely on best-case rental figures, and vacancy and cost assumptions matter.
LVR & security
SMSF loans are typically offered at lower loan-to-value ratios than ordinary loans, and the security is the single asset in the holding trust. LVR limits are usually tighter, not looser.
Fund financials & compliance
Current, reconciled fund financial statements and a clean compliance position support a lender's confidence. Unresolved compliance issues can affect timing and feasibility.
Trustee / borrower structure & repayment capacity
The trustee and borrower structure must meet lender policy, and the fund must show it can meet repayments through the loan term — assessed against the lender's serviceability buffers.
We cannot promise that any particular lender, structure or document will be accepted. Lender policy changes, and every application is assessed on its own facts.
The One Roof point
Why SMSF accounting and lending records must align.
An SMSF property loan sits at the intersection of accounting, compliance and lending. When those records do not tell a consistent story, applications stall.
A lender forms its view of an SMSF from the fund’s financial statements, tax returns, audit position and member balances, alongside the trust deed, investment strategy and holding-trust documents. If those records are out of date, unreconciled, or inconsistent with the loan application, the lender’s confidence drops and timing slips — sometimes the application cannot proceed at all.
Because Eternity Group is a Chartered Accountant and tax agent and a mortgage-broking practice under one roof, the same team that understands the fund’s accounts can help line up the accounting and the lending evidence so the position is internally consistent — not stretched. That coordination is the value; it is not a promise of any particular outcome, and it does not replace the legal and licensed-advice steps below.
Practically, that means bringing the fund’s bookkeeping, tax and audit records up to date early, identifying the evidence a lender will want before an application is made, and coordinating with the solicitor preparing the holding trust and with any licensed financial adviser advising on suitability.
Important boundaries
Legal and financial advice boundaries.
Read this before going further. SMSF property borrowing involves decisions that sit outside what an accountant or mortgage broker can advise on.
Eternity Group does not provide personal financial product advice. Whether to establish or run an SMSF, whether the fund should hold property, and whether it should borrow are personal financial product advice questions that require a licensed financial adviser holding an AFSL. We do not assess or confirm whether an SMSF or an LRBA is right for your circumstances.
Eternity Group does not provide legal advice. The holding (bare) trust, the loan documents and the property contracts are legal documents that should be prepared and reviewed by a solicitor. They are not a formality and are not a DIY exercise.
The structure must comply with both superannuation law and the lender’s requirements. Related-party and residential-property rules are strict. Do not proceed on the information on this website alone — obtain personal financial advice, legal advice and confirmation of lender policy on your specific circumstances first.
Where information on this page combines tax and lending considerations, tax-related statements are general only and depend on individual circumstances. Eternity Group Accountants is a registered tax agent (TPB 25523469). Mr Rohan Manokaran (Credit Representative 565110) is authorised under Australian Credit Licence 561324. Seek personal tax and credit advice based on your situation.
A balanced view
Who this may be relevant to discuss — and who it may not.
This is general information about where the conversation can be useful, not an eligibility or suitability assessment. Whether any fund should proceed is a matter for licensed advice and lender assessment.
May be relevant to discuss
Trustees already weighing an LRBA
SMSF trustees who are already considering property borrowing with appropriate advice, want their fund accounting and lending evidence coordinated, and understand that the decision, the suitability and the legal structure sit with a licensed adviser and a solicitor.
May not be the right path
Where the basics are not in place
Where the fund lacks the liquidity, contribution capacity or documentation, where the records are behind, or where the trustee has not obtained financial and legal advice. SMSF borrowing is not suitable for everyone, and bringing records up to date or seeking advice usually comes first.
How we help
Coordinating the accounting and the lending side.
Our role is the accounting/tax records and the mortgage-broking coordination — working alongside your solicitor and licensed financial adviser, not replacing them. It is not a promise of approval.
Review the fund's accounting & tax position
We look at the fund's financials, tax returns, audit position and member balances so the real picture is clear before any lender is approached.
Identify the lender evidence needs
We identify the documents and evidence a lender is likely to want for an SMSF loan, and where the fund's records need work first.
Coordinate the document requirements
We help line up the fund records, the trust documents and the lending evidence so they are consistent — coordinating with the solicitor and adviser.
Mortgage-broking assistance
Where you proceed, we can assist with the lending application through our mortgage-broking service, subject to the lender's credit assessment. Approval cannot be guaranteed.
Work alongside your advisers
We work alongside the solicitor preparing the holding trust and any licensed financial adviser advising on suitability — staying within our accounting and credit-assistance role.
No outcome promised
We help organise and present the evidence; we do not advise on whether to borrow, and no finance or compliance outcome is promised.
How we are paid
How we are paid: Eternity Mortgage Solutions typically receives commissions from the lender for loans arranged on your behalf. A full explanation of how we are paid, our lender panel and any potential conflicts of interest is provided in our Credit Guide and Credit Proposal Disclosure document, available on request before any loan application is submitted.
Frequently asked questions
SMSF property loans & LRBAs — common questions.
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.
Next step
Want the accounting and lending side coordinated?
Book a consultation. We can review the fund's accounting position, explain the evidence a lender is likely to want, and coordinate with your solicitor and licensed financial adviser. We do not advise on whether to borrow, and no finance outcome can be promised.
Related
Where this fits in the SMSF cluster
SMSF property lending sits alongside the SMSF compliance, strategy and accounting pages and the general SMSF property guides that explain the rules and the acquisition process.
- SMSF
SMSF services overview
The full SMSF services scope — setup, annual return, audit coordination, compliance and investment strategy.
- SMSF
SMSF setup
Establishing the fund correctly — trustee structure, deed, registration and the ongoing obligations that follow.
- SMSF
SMSF compliance & contribution rules
The sole-purpose test, related-party and in-house asset rules that an LRBA must satisfy. General information.
- SMSF
SMSF investment strategy review
Documenting the concentration, liquidity and diversification effects a borrowed property has on the fund strategy.
- Guide
Guide: how an SMSF buys property
The general acquisition process — outright purchase versus an LRBA, and the steps and parties involved.
- Guide
Guide: SMSF property rules
What an SMSF can and can’t do with property — sole-purpose, related-party and residential rules. General information.
- Local
Get in touch
Book a scoping call to coordinate the accounting and lending side. We confirm where licensed and legal advice is needed.