SMSF property lending changed significantly on 10 August 2026. New limited recourse borrowing arrangements to purchase residential property are no longer available to self-managed super funds following the commencement of the 2026 tax reform legislation. What has not changed is the ability for SMSFs to borrow to purchase commercial property, and the rules, process, and document requirements for that path remain fully in force.
This guide covers what SMSF trustees need to understand about commercial property lending through an LRBA, the documentation required before an application can proceed, and how an experienced SMSF broker can help structure the process correctly from the start. This content is general information only and does not constitute personal financial or credit advice. Individual circumstances vary, and trustees should seek independent legal and financial advice before proceeding.
What Changed in August 2026
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 introduced a ban on new LRBAs for residential property purchases by SMSFs, effective 10 August 2026. Existing residential LRBAs entered into before that date are protected and can continue under their current terms.
Commercial LRBAs are completely unaffected by the legislative change. An SMSF can still borrow to acquire commercial property, provided the property meets the relevant requirements under the Superannuation Industry (Supervision) Act 1993 and the loan is structured as a compliant LRBA.
Trustees with questions about their existing arrangements, or who are exploring a commercial property purchase, should confirm their position with both a licensed SMSF specialist and a qualified legal adviser before proceeding.
How SMSF Commercial Property Lending Works
An LRBA is a specific borrowing structure that allows an SMSF trustee to borrow funds to acquire a single acquirable asset. The borrowing is limited recourse because the lender’s recourse in the event of default is restricted to the asset being acquired. The lender cannot access other assets held within the SMSF. The structure requires a bare trust, also called a holding trust or custodian trust, to be established before settlement. The bare trustee holds legal title to the property while the loan is outstanding. Once the loan is fully repaid, legal title transfers to the SMSF trustee.
The SMSF lending solutions page outlines how FirstPoint works with trustees through this structure. The SMSF loans page covers the loan types and eligibility overview.
Rules SMSF Trustees Must Follow
Several rules govern SMSF property lending. Trustees must understand each of them before proceeding with a purchase, because errors in structure can affect the fund’s compliance status.
The Business Real Property Test
For an SMSF to acquire commercial property from a related party, the property must satisfy the business real property test under the SIS Act. Business real property is generally land and buildings used wholly and exclusively in carrying on a business. A property that does not meet this definition cannot be acquired from a related party, though unrelated party purchases are assessed differently.
The Sole Purpose Test
All SMSF investments must satisfy the sole purpose test. The fund must be maintained for the sole purpose of providing retirement benefits to its members. A commercial property purchase that provides a private benefit to a trustee or related party outside the fund’s investment strategy risks breaching this requirement.
Arm’s Length Terms
The LRBA must be conducted on arm’s length terms. The ATO has published safe harbour guidelines that set out benchmark terms for compliant LRBAs. An LRBA that does not comply with these or equivalent commercial terms may be treated as non-arm’s length income, with significant tax consequences for the fund.
| LRBA Rule | What It Requires | Why It Matters |
| Business real property test | Property used wholly and exclusively in a business | Determines whether related party acquisition is permissible |
| Sole purpose test | Fund maintained solely for retirement benefit provision | Breach risks fund non-compliance and significant penalties |
| Arm’s length terms | Loan structured on commercially comparable terms | Non-compliance may trigger non-arm’s length income tax treatment |
| Bare trust structure | Separate holding trust established before settlement | Legal requirement for all LRBAs; cannot be established retrospectively |
| Single acquirable asset | Each LRBA covers only one asset | Multiple assets require separate borrowing arrangements |
The SMSF Lending Process Step by Step
SMSF commercial lending is more involved than standard business property finance. Understanding the steps before you start helps prevent delays and ensures the structure is in place before any commitment is made to a vendor.
- Review the SMSF trust deed. The trust deed must expressly permit borrowing. If it does not, it needs to be amended before any application is lodged. An SMSF specialist legal adviser handles this step.
- Update the investment strategy. The fund’s investment strategy must reflect the proposed property purchase, including the borrowing. Lenders require a current, signed investment strategy as part of the application.
- Establish the bare trust. The bare trust deed must be prepared and executed before settlement. This requires a solicitor experienced in SMSF structures, and some lenders have specific requirements about the form of bare trust deed they will accept.
- Identify the lender. The lender pool for SMSF commercial lending is narrower than for standard commercial property finance. A broker with access to a full panel of lenders can identify which lenders are currently active in this space and which are most likely to suit the fund’s profile.
- Compile the application documents. The document list for an SMSF loan is significantly more extensive than a personal application. The checklist in the following section covers the core requirements.
- Submit and manage the application. Once lodged, the broker manages communications between the lender, the SMSF trustee, and the conveyancer through to conditional approval and settlement.
| Stage | What Happens | Typical Timeframe |
| Trust deed and strategy review | Legal adviser confirms borrowing is permitted and strategy is updated | 1 to 3 weeks |
| Bare trust establishment | Solicitor prepares and executes the bare trust deed | 1 to 2 weeks |
| Lender identification | Broker matches the fund profile to suitable SMSF lenders | 1 to 2 weeks |
| Application preparation | All documents compiled and verified | 1 to 3 weeks depending on readiness |
| Application assessment | Lender reviews and issues conditional approval | 2 to 6 weeks depending on lender |
| Settlement | Bare trust takes title, SMSF commences loan repayments | Subject to conveyancing and property conditions |
Documents You Need to Prepare
The document requirements for an SMSF lending application are significantly more extensive than a standard commercial or residential application. Having these organised before you approach a lender saves time and reduces the chance of an application stalling at assessment.
The core documents required include:
- SMSF trust deed, including any amendments
- Investment strategy, current, signed, and reflecting the proposed purchase
- Bare trust deed, executed before settlement
- Financial statements for the fund for the most recent two financial years
- Member details for all trustees and members
- Tax returns for the fund
- Proof of identity for all individual trustees or directors of a corporate trustee
- Details of the property being acquired, including the contract of sale and a valuation
- Evidence of the fund’s existing asset position and contribution history
| Document | Purpose | Who Provides It |
| SMSF trust deed and amendments | Confirms the fund is authorised to borrow | SMSF solicitor or administrator |
| Investment strategy | Confirms the purchase aligns with fund objectives | Trustees, with adviser guidance |
| Bare trust deed | Establishes the holding structure required by the lender | SMSF solicitor |
| Fund financial statements | Confirms the fund’s financial position and serviceability | SMSF accountant |
| Trustee identification | Meets AML and CTF obligations | Individual trustees or corporate trustee directors |
| Property contract and valuation | Confirms the asset being acquired | Conveyancer and registered valuer |
For trustees who want to model repayment scenarios before committing to a loan amount, the loan repayment calculator provides a useful starting point. The mortgage glossary covers key SMSF lending terms in plain English.
Why the Lender Pool Is Narrower for SMSF Loans
Not all lenders offer SMSF commercial lending products. Major banks have periodically entered and exited this segment, and the current active lender pool is weighted toward non-bank and specialist lenders.
This makes broker selection more important for SMSF applications than for standard investment property lending. A broker who does not regularly place SMSF applications may not have current relationships with the lenders who are active in this space.
The same consideration applies when comparing SMSF lending to standard business loans, where the lender field is broader and commercial assessment criteria apply without the additional compliance layer that SMSF structures require.
Working With FirstPoint on Your SMSF Loan
FirstPoint works with SMSF trustees across the Sutherland Shire and Greater Sydney on commercial property lending. The process starts with a clear assessment of the fund’s current position, the proposed acquisition, and the documentation required before an application can be lodged.
The services page outlines the full scope of what FirstPoint handles across SMSF and commercial lending. For a picture of your borrowing capacity before you commit to a property, the how much can I borrow page is a useful starting point.
To find out more about how FirstPoint works with trustees in your area, visit the areas we serve page. To see how the team supports local buyers and investors, visit the Sutherland Shire mortgage broker page. When you are ready to proceed, contact the FirstPoint team directly.
Frequently Asked Questions
Yes, an SMSF can still purchase commercial property through a limited recourse borrowing arrangement. The legislative change that commenced on 10 August 2026 prevents SMSFs from entering new LRBAs for residential property only. Commercial property LRBAs are unaffected by that change.
A bare trust, also called a holding trust or custodian trust, is a separate legal structure required for all LRBAs. The bare trustee holds legal title to the property while the LRBA loan is outstanding, protecting the SMSF’s other assets from the lender’s recourse. Once the loan is repaid, legal title transfers to the SMSF trustee.
SMSF lending requires an LRBA structure, a bare trust, and a compliant investment strategy, none of which apply to standard commercial lending. The lender pool is also narrower, and lenders assess both the fund’s financial position and the individual trustees, not just the commercial property’s income potential.
Timelines vary depending on document readiness, the lender, and the complexity of the fund structure. The process from initial preparation through to settlement typically takes longer than a standard commercial application due to the additional legal steps involved. A broker who works in this space regularly can give you a realistic timeline estimate after reviewing your fund’s position.
The business real property test determines whether an SMSF can acquire property from a related party. To satisfy the test, the property must be used wholly and exclusively in carrying on a business. A property used partly for private purposes or that does not meet this definition cannot be acquired from a related party under the SIS Act rules, and trustees should confirm their specific situation with a qualified legal adviser before proceeding.
