SMSF
SMSF Property Loans: What You Need to Know
Investing in property through a Self-Managed Super Fund (SMSF) is a strategy some Australians use for their retirement savings. However, the rules surrounding SMSF lending are complex and strictly enforced by the ATO.
Credit is subject to lender criteria, assessment and approval. Fees, charges and eligibility criteria may apply.
Danny SaputraPublished Updated 2 min read
Limited Recourse Borrowing Arrangements (LRBA)
SMSF property loans must be structured as an LRBA. This means the lender's rights are limited to the property itself in the event of a default, protecting the other assets within your super fund.
Key Considerations for SMSF Borrowers
- Commercial vs residential: From 10 August 2026, SMSFs can no longer enter new borrowing arrangements to buy residential property, although contracts exchanged on or before 9 August 2026 may not be affected. SMSFs can still borrow to buy commercial property. You cannot live in or rent a residential SMSF property to yourself or a family member.
- Liquidity Requirements: Most lenders require the fund to maintain a "liquidity buffer" (often 5 to 10% of the property value) after the purchase.
- Contributions: Your super contributions and the rent from the property are used to service the loan.
The Refinance Opportunity
Many older SMSF loans were written at higher rates than what is available today. Refinancing an existing SMSF loan may reduce your fund's interest costs, depending on the rates, fees and loan terms involved.
We do not provide financial, tax, legal, superannuation or investment advice. SMSF lending can be complex. Please seek independent professional advice before making SMSF decisions.
Questions
Common questions
Can I use my SMSF to buy a holiday home?
No. You cannot live in or use a property owned by your SMSF, and neither can your family members. It must be a strictly commercial investment for retirement purposes.
What is the maximum LVR for SMSF loans?
Typically, lenders cap SMSF commercial property loans at around 65 to 70% LVR. Existing residential SMSF loans that are refinanced are often capped at 70 to 80% LVR.
Are SMSF loan interest rates higher?
Yes, SMSF loans generally carry slightly higher interest rates than standard owner-occupied or investment loans due to the complexity and limited recourse nature of the borrowing.
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General information only, not personal advice.
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