SMSF property: the essentials

SMSF lending has narrowed. Under current rules, new SMSF property purchases are limited to commercial property — residential SMSF purchases are off the table for now. What remains open is refinancing an existing SMSF loan and buying commercial property through your fund.

Both use a limited recourse borrowing arrangement (LRBA). 'Limited recourse' means the lender's claim is limited to that property — the rest of the fund's assets are protected. The property is held in a separate bare trust until the loan is repaid, and it must meet the sole purpose test.

For a commercial purchase, lenders want to see a healthy fund balance, steady contributions and enough liquidity to service the loan alongside the fund's other obligations. For a refinance, they review the existing arrangement, the bare trust and the lease behind the property. Deposit and liquidity requirements are typically higher than standard lending.

You'll need your accountant, financial adviser and conveyancer aligned — SMSF transactions have more moving parts than a standard loan. We coordinate the lending side from setup through to settlement.