An SMSF loan is a limited recourse borrowing arrangement. The fund borrows to buy a single asset, the asset sits in a separate holding trust, and the lender’s recourse is limited to that asset. Since 10 August 2026 a new arrangement can only be used for business real property.
Current as at September 2026.
Quick answer: an SMSF loan is a limited recourse borrowing arrangement (LRBA). The super fund borrows to buy a single asset, the asset sits in a separate holding trust, and if the loan goes bad the lender can only take that asset, not the rest of the fund. Since 10 August 2026 a new LRBA can only be used to buy real property if it’s business real property. Existing residential LRBAs continue and can be refinanced, but new borrowing to buy a house or unit inside super is closed.
That last paragraph is the whole change, and most of the confusion we’re hearing comes from people who’ve read the headline and not the detail. So the detail.
How is an SMSF loan structured?
An SMSF can’t just take out a mortgage. Superannuation law restricts borrowing, and the LRBA is the one structure that’s permitted for buying an asset with debt. It has four parts.
The fund. Your SMSF is the borrower and the beneficial owner of the property. It makes the repayments, out of contributions and rent.
The holding trust. Sometimes called a bare trust or custodian trust. A separate trustee holds legal title to the property on behalf of the fund while the loan exists. The ATO‘s description is that the borrowed money is “applied for the acquisition of a single acquirable asset” which is held in that trust. Once the loan is repaid, title can transfer to the fund.
The lender. Their recourse is limited to the asset in the holding trust. That’s the “limited recourse” part and it’s a big reason SMSF loans tend to cost more than standard loans: the lender can’t come after the rest of the fund if the property falls short.
The single asset. One LRBA, one asset. Two titles generally can’t be bought under one arrangement unless they’re genuinely a single asset (the ATO gives examples, a house on two titles that can’t be sold separately, for instance).
Each part needs paperwork. The fund’s trust deed has to permit borrowing. The holding trust needs its own deed. The fund’s investment strategy has to cover the purchase. Lenders want to see all of it before they’ll assess anything.
What changed on 10 August 2026
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. The ATO’s summary of the effect is that an LRBA entered into on or after 10 August 2026 can only be used to acquire real property if the property is business real property.
Business real property is land and buildings used wholly and exclusively in one or more businesses. A warehouse, a shop, a medical suite, a factory unit, an office. The test is the use, not the building, so a house used purely as business premises can qualify and a house someone lives in can’t.
The ATO lists what’s unaffected:
- Existing LRBAs entered before 10 August 2026. They continue as they are.
- Refinancing of those existing LRBAs. You can move an existing residential SMSF loan to a new lender.
- Binding contracts to buy real property exchanged before 10 August 2026, even if settlement or the loan happens later.
What an SMSF loan looks like now, in practice
Three kinds of file.
Refinancing an existing residential LRBA. The fund already owns a house or unit under an LRBA from before August. The loan on it might have been written years ago at whatever the SMSF rate was then. Refinancing is explicitly allowed and it’s the most common SMSF conversation we’re having at the moment, because a lot of these loans have never been reviewed.
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Buying business real property. The fund borrows to buy commercial premises. The case that comes up most is a business owner whose fund buys the premises the business operates from and leases them back at market rent. Two separate exceptions make that possible: business real property can be acquired from a related party, and business real property leased to a related party on arm’s length terms is excluded from the in-house asset rules. That’s a conversation for your accountant and adviser on the compliance side (sole purpose test, market rent, the in-house asset rules) and for us on the lending side.
Buying residential property without borrowing. Not a loan at all. A fund with enough cash can still buy a house outright. Nothing about that changed.
What lenders ask for
It varies by lender, and after 10 August the residential products are refinance-only. But the questions are consistent.
Fund balance. Lenders set a minimum. Lender requirements differ by fund, and we compare the published SMSF products in Which lenders offer SMSF loans. Others differ.
Liquidity after settlement. Lenders generally want the fund to keep a cash buffer after the purchase, so that repayments can be met if rent stops or the market drops. How much is lender policy.
Loan size and LVR. Minimum and maximum loan sizes vary by lender, and SMSF loans are written at a lower LVR than a standard home loan. The published figures, lender by lender, are set out in our SMSF lender comparison.
Contributions and rent. The fund services the loan from what comes in. Lenders look at member contributions, the rent the property will earn, and whether the combination covers repayments with room to spare.
The documents. Fund deed, holding trust deed, investment strategy, recent fund financials and tax returns, member details, the property contract.
What a broker does on an SMSF loan
We don’t advise on whether you should have an SMSF or whether property belongs in it. That’s a licensed financial adviser’s job. What we do is the lending: which lenders will look at this fund, what they’ll want, how to structure the application so it fits their policy, and running it through to settlement alongside your accountant and adviser. The Burwood page says we coordinate directly with your accountant and financial adviser, and that’s literal, we’re usually on the same email chain.
If you have an existing SMSF loan that hasn’t been reviewed since it was written, or you run a business and want to understand whether the fund could buy your premises, that’s a conversation. Call 02 9037 2825.
This is general information only. It doesn’t consider your circumstances and isn’t financial, tax or legal advice. Whether an SMSF or property within it suits you is a matter for a licensed financial adviser and your accountant.
Frequently Asked Questions: SMSF Loans Explained
Can an SMSF still borrow to buy a house?
Not to buy one as residential property under a new LRBA entered on or after 10 August 2026. Existing residential LRBAs continue and can be refinanced. Contracts exchanged before 10 August are covered by transitional rules.
Can an SMSF still borrow to buy commercial property?
Yes, if it’s business real property, meaning land and buildings used wholly and exclusively in a business.
What is a bare trust in an SMSF loan?
The separate trust that holds legal title to the property while the loan exists. The fund is the beneficial owner and the lender’s recourse is limited to that asset.
Further reading: the government’s Moneysmart guidance on self-managed super funds.
Related reading
- SMSF Lending Isn’t What Your Bank Says It Is
- Can You Use Your Super to Buy a House?
- Buying Property With Superannuation: Rules and Risks
- More on SMSF lending
Book a broker or find a broker near you. Or call the Burwood office on 02 9037 2825.
General information only. This article does not take your objectives, financial situation or needs into account, and is not financial product, tax or legal advice. Lending criteria, fees and rates vary by lender and change without notice. Loan Lounge, Australian Credit Licence 515608.