A self-managed super fund can borrow to buy commercial property, but only through a specific structure called a limited recourse borrowing arrangement. It’s a useful option for some fund members and the wrong one for others, so it pays to understand the basics first.
How the structure works
The property is held in a separate trust, often called a bare trust or custodian trust, until the loan is repaid. If the fund can’t repay, the lender can only claim the property itself, not the fund’s other assets. That’s why lenders treat these loans more cautiously than a standard investment loan.
What the property can be used for
- As of August 2026, an SMSF can no longer borrow to purchase a residential property, so SMSF lending now applies to commercial property only.
- Commercial property, such as your business premises, can be leased to your business at market rent.
- The fund generally can’t use borrowed money to substantially change the property, such as a major renovation.
Who to talk to
An SMSF loan involves three conversations: a financial adviser on whether the strategy suits you, an accountant on the fund’s structure and tax, and a broker on the lending. George handles the lending side and works with your other advisers so everyone is on the same page.
This article is general information only and does not take into account your objectives, financial situation or needs. It is not credit advice. Credit Representative 406032 is authorised under Australian Credit Licence 384408. Australian Credit Licence 384408 is held by Elders Home Loans Pty Ltd (ABN 22 118 064 654).
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