SMSF Loans

Small to medium sized Self managed superannuation funds can now borrow money to purchase both Residential and Commercial properties. The restriction to buy property without borrowing has now been removed on smsf.

Did you know?

According to a recent leading market survey up to 72% of Australians are looking to transfer their super to an SMSF and up to 91% of those to borrow and invest into Australian residential property through their newly created SMSF.

There are more the 430,000 SMSF’s

More than 250,000 Australians have made the shift to be part of an SMSF in the last 3 years
SMSF’s account for more super than any other sector with over 30% of the 1.2 trillion super dollars held.
The number of people under 35 choosing to setup an SMSF more than doubled last quarter


Establish a simple property holding trust to acquire the nominated investment property on behalf of your SMSF. This is a legal requirement that protects all of the other assets of your SMSF from any issues arising from your property investment.

To comply with the regulations, our funders will provide funds to the SMSF by way of a limited recourse loan. You can then combine these funds with a deposit sourced from your SMSF to complete the purchase of your chosen investment property. The SMSF has an ownership interest in the property that entitles it to income and gains from the property.Once the loan is repaid, the mortgage will be discharged just like any other property loan.

Portfolio Diversification

The typical superannuation portfolio contains fixed income assets, cash and shares. Acquiring an investment property may broaden and diversify your SMSF portfolio.

You can use the funds in your SMSF as a deposit to acquire investment properties of greater value and higher quality, giving you enhanced long-term investment potential. Our funders are not restricted to SMSF loans of a particular size, nor requires a minimum level of contribution. All applications are reviewed on a case by-case basis to improve your choice of options across residential and commercial properties and Funders. We  recommend that you seek independent financial advice as it may be uneconomical for an SMSF to borrow where its net assets are less than a certain level.

Here are some of the advantages and disadvantages of buying property with Super:


  • Enjoy direct control and diversification of your super investments
  • Lenders have no recourse to your other assets within the SMSF
  • You may be exempt from paying capital gains tax on the sale or rent of the property if you continue to hold the investment after retirement.
  • If you sell or rent the property before you retire, you pay only 15% capital gains tax. If you own the property for more than 10 years, you will only pay 10% capital gains tax.


  • You can’t live in the property, and nor can any friends, family members or other related parties.
  • Running a SMSF can be complicated and expensive. Penalties for getting things wrong are high!

The Process

1. Obtain an Indicative Finance Approval

Indicative Loan approval should be obtained from Funder in the ordinary way. Documentation required to verify income for all SMSF members.

Extra Documentation Required;

  1. Current Financial Year contributions to Superannuation
  2. Previous financial year contributions to Superannuation
  3. The current or proposed asset balance of SMSF
  4. The proposed rental of the security property
  5. The proposed postcode for the proposed security property

2. Establish / review the SMSF

Engage a qualified financial planner to advise you on the appropriateness of your SMSF borrowing funds to purchase an investment property. Compliance requires, amongst other things, that the fund has a maximum of four members, all of which are individuals, and that each eligible member is either an individual trustee or, where a corporate trustee is used, a director of the trustee company. SMSFs with single members may instead have two individual trustees where the member is one of the trustees.

3. Establish the Property Holding Trust

It is desirable that the trustee company is not associated with the investor/SMSF. This is to ensure that the arrangement is not a “sham”. “Sham ” arrangements are likely to be viewed by the ATO “form over substance” arrangement and may therefore be considered to be noncompliant with the intention of the SIS Act amendments. The Property Trust Deed is a key document. Care is required to ensure there are no adverse GST, taxation or stamp duty consequences.

Where you don’t already have a Trust Deed we can assist with the establishment as part of the application process

4. Instructions to Solicitors/Conveyancers

Ensure that the lawyer / conveyancer acting for the SMSF on the purchase of the property understands that the property must be purchased in the name of the Property Trustee. This is an essential part of the structure – the SMSF cannot be registered proprietor.

5. Contracts exchanged

6. Loan documents issued

7. Settlement

The purchase is completed.

Are there any restrictions?

There are restrictions on SMSF loans which prevent some transactions from taking place. For example:

  • Construction loans or redraw may not be available. However the SMSF can pay for renovations out of its own funds, but cannot borrow additional funds for this purpose.
  • Buying a residential property in your SMSF that you intend to live in
  • Selling a residential property to your SMSF, that you or a related party owns (commercial property is acceptable)
  • The SMSF loan is strictly limited to full documentation loan applications only
  • All members of the SMSF should also be in the accumulation phase (i.e., making contributions) rather than in the pension phase (i.e., receiving a pension) although we may consider limited exceptions on a case by case basis.

If you are still confused we have mortgage brokers that specialise in SMSF Loans. Please complete our Express Enquiry Form or Phone Direct and you can discuss your situation with an expert.

If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your home loan application and the on-going communication between all parties until your home purchase is settled


This information is provided as a general guide only and is not advice or a recommendation to enter into any transaction, and is subject to the final terms as set out in final documentation. This information has been obtained from sources that we believe to be reliable and we make no representations as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. We do not purport to be, legal, tax, accounting, financial or regulatory advisors in any jurisdiction. The author acts neither as an adviser to, nor owes any fiduciary duty to any recipient of this information.
Prior to entering into any proposed transaction, the recipient should independently evaluate the risks of such a transaction and the recipient’s ability to assume such risks from their licenced financial adviser.