The structure (high‑level)
- LRBA (limited recourse borrowing arrangement): The property is held in a bare trust; lender’s recourse is limited to the asset.
- Arms‑length & sole‑purpose: All dealings must be commercial‑rate and for retirement purposes. Related‑party use is restricted.
Pros
- Diversification, potential income and capital growth inside super.
- Concessional tax rates inside the fund.
Considerations & risks
- Lower LVRs and stricter servicing than standard loans.
- Limited ability to improve or develop the property while under LRBA.
- Higher setup/admin costs; liquidity and contribution cap constraints.
Best‑practice steps
- Confirm your investment strategy allows for property and gearing.
- Get tax/legal advice; model scenarios and liquidity buffers.
- Pre‑assess lending early — policy varies widely by lender.
Important: SMSF lending is complex and regulated. Always obtain independent financial, tax and legal advice.
Book an SMSF lending pre‑assessment Request a free Strategy Call.
We’ll outline viable lenders and next steps to brief your advisers.