A self-managed super fund (SMSF) gives you direct control over how your retirement savings are invested — and for many Australians, property is the investment they understand best. If your SMSF has sufficient funds and a compliant structure in place, it may be possible to borrow money within the fund to purchase an investment property, using a legal arrangement called a Limited Recourse Borrowing Arrangement (LRBA).
SMSF lending is one of the most specialised areas of the Australian mortgage market. Not all lenders offer it, criteria are strict, and the loan and trust structure must comply with superannuation law. At RAI Financial Services in Castle Hill, we have the expertise to guide SMSF trustees through this process from start to settlement.
Your SMSF can purchase residential investment property — houses, units, and apartments — provided it meets the superannuation sole purpose test. The property must be held as an investment generating rental income for the fund. Strict rules apply about who can rent and occupy the property.
Commercial property is one of the most popular SMSF strategies, particularly for business owners. A business owner can purchase their premises through their SMSF and lease it back to their own business at market rent — a legitimate and tax-effective arrangement. LVRs for commercial SMSF loans are typically up to 70%.
Major banks largely exited SMSF lending after 2018. Broker expertise critical in selection of specialist non-bank lenders
Note: tax outcomes depend on your individual circumstances. We strongly
recommend speaking with a qualified SMSF accountant or financial adviser before making investment decisions.
Yes. Your SMSF must be properly established and compliant before a lender will consider an application. The bare trust must also be set up — and in some states this must be done before you sign a purchase contract. We can refer you to an SMSF administrator and solicitor if needed.
As a general guide, most financial advisers suggest a minimum of $200,000–$300,000 in your SMSF before considering property investment, to ensure sufficient liquidity after the deposit and costs are paid. Lenders also have their own minimum requirements.
No. You cannot purchase a property through your SMSF and live in it — this would breach the sole purpose test. The property must be an investment generating income for the fund.
You can use the SMSF’s own cash for repairs and maintenance. However, you cannot use borrowed funds (the LRBA) for renovations or improvements. Borrowed money must be used only for the original purchase.
Typically four to eight weeks from application, depending on the lender and documentation. We recommend allowing for an extended settlement period when negotiating your purchase contract.
Yes. If your SMSF already has a property under an LRBA, refinancing to a better rate is possible. We can review your existing loan against current market offerings — meaningful savings may be available.