An SMSF loan (Self-Managed Super Fund loan) allows your SMSF to borrow money to purchase an investment property through a Limited Recourse Borrowing Arrangement (LRBA). It is one of the most powerful wealth-building strategies available to Australian business owners and investors in 2026.
What Is an SMSF Loan?
An SMSF loan is a limited recourse borrowing arrangement where your self-managed super fund takes out a loan to acquire a single asset — typically residential or commercial property. The asset is held in a bare trust until the loan is fully repaid, at which point ownership transfers to the SMSF. The limited recourse nature means that if your SMSF defaults, the lender can only seize that specific asset — not your other super holdings.
Can Your SMSF Borrow to Buy Property?
Yes. Under Section 67A of the Superannuation Industry (Supervision) Act 1993, SMSFs are permitted to borrow under an LRBA to acquire a single allowable asset. Your SMSF can borrow to buy residential investment property, commercial property (including your own business premises), and industrial or retail property.
One of the most popular strategies is for a business owner to have their SMSF purchase their commercial premises and lease it back to the business — paying rent into super instead of to a landlord.
SMSF Loan Requirements
- Minimum SMSF balance: $200,000 to $250,000 (varies by lender)
- LVR: Up to 70% residential, up to 65% commercial
- Trust deed: Must specifically permit borrowing
- Bare trust: Required to hold the asset during the loan term
- Serviceability: Contributions and rental income must cover repayments
- Compliance: Fund must be ATO-compliant with no audit issues
SMSF Loan Interest Rates Australia 2026
SMSF loan rates are slightly higher than standard investment property loans due to the additional complexity. Indicative 2026 rates include: residential SMSF loans from 6.49% to 7.99% p.a. variable or 6.29% to 7.49% p.a. fixed; commercial SMSF loans from 6.99% to 8.99% p.a.; and non-bank SMSF lenders from 7.49% to 9.99% p.a. As an independent broker, Co-Pilot Finance compares SMSF lenders across our full panel to find the most competitive rate.
Buying Your Business Premises Through Your SMSF
Purchasing commercial premises inside your SMSF and leasing it back to your own business is one of the most tax-effective strategies available to Australian business owners. Rent is paid into your super fund and taxed at just 15% (or 0% in pension phase). Your business still claims a full tax deduction for rent paid. Capital gains are capped at 10% if held over 12 months in pension phase. The asset is protected within the super structure and builds your retirement nest egg simultaneously.
SMSF Loan Process Step by Step
- SMSF review: Ensure your trust deed permits borrowing and your fund is ATO-compliant
- Bare trust setup: A solicitor establishes a separate holding trust to hold the asset
- Property selection: Identify the residential or commercial property your SMSF will purchase
- Loan application: Co-Pilot Finance submits to our panel of SMSF-approved lenders
- Settlement: The bare trust purchases the property, the SMSF begins servicing the loan
- Transfer on payoff: Once the loan is repaid, ownership transfers from bare trust to SMSF
Frequently Asked Questions About SMSF Loans
Can I use my SMSF to buy residential property?
Yes. Your SMSF can purchase residential investment property under an LRBA. However, you and related parties cannot live in or use the property personally. It must be a genuine investment held for the benefit of SMSF members in retirement.
How much can my SMSF borrow?
Most lenders will lend up to 70% of the property value for residential (meaning your SMSF needs a 30% deposit) and up to 65% for commercial. The maximum also depends on your fund’s ability to service repayments from contributions and rental income.
Can I buy my own business premises through my SMSF?
Yes. Business real property can be purchased by your SMSF and leased back to your business at market rent. This is one of the few permitted related-party transactions under superannuation law and is an extremely effective tax and wealth strategy for business owners.
What is a bare trust and why do I need one?
A bare trust (or holding trust) is a legal structure that temporarily holds the property on behalf of the SMSF while the loan is being repaid. It is required by law for all LRBA arrangements. Once the loan is fully paid, the property transfers directly into the SMSF.
Is an SMSF loan right for me?
An SMSF loan suits business owners and investors with a well-funded SMSF (typically $200,000 or more), a clear investment strategy, and access to good financial and legal advice. Co-Pilot Finance works alongside your accountant and SMSF administrator to make the process as straightforward as possible.
Ready to explore an SMSF property purchase? Talk to the Co-Pilot Finance team today — we compare lenders, explain the structure, and manage the process end to end.
Related: Business Finance Australia | Business Loans 2026 | Asset Finance Australia | Commercial Property Finance