Your finance destination for Self-Managed Super Fund Lending in Melbourne.

Yes, an SMSF can borrow to invest in certain assets such as residential or commercial property using a Limited Recourse Borrowing Arrangement (LRBA), provided the trust deed permits it.

Under this structure, the loan must be used to acquire a new investment asset, and the borrowing must comply with the rules set by the Australian Taxation Office (ATO). Rental income generated by the asset, along with member contributions and earnings from other investments, can be used to repay the loan over time.

It’s important to ensure the borrowing arrangement is properly structured and aligned with superannuation law. Independent legal and financial advice is strongly recommended before proceeding.

An SMSF loan is not the same as a typical loan and comes with stricter rules and less flexibility. SMSF loans are arranged through a Limited Recourse Borrowing Arrangement (LRBA), meaning if the SMSF defaults and the asset is sold for less than the loan amount, the lender can only recover the shortfall from that specific asset not from other SMSF assets. All major banks have exited the space and grandfathered their SMSF loan products. However, finance brokers like SMSF Mecca can access a range of specialist lenders who continue to offer SMSF loan solutions tailored to your investment goals. Keep in mind that while the SMSF is protected, many lenders will require a personal guarantee, which could leave you personally liable for any shortfall. Independent advice is recommended before proceeding.

Loans can be structured as either principal and interest or interest-only, depending on your strategy. Terms may extend up to 30 years, and borrowing is generally available up to 80% of the property value, subject to servicing capacity and lender criteria.

While a corporate trustee isn’t legally mandatory, lenders generally won’t approve SMSF loans unless the fund has a corporate trustee. If your existing SMSF has individual trustees, this structure would need to be updated before applying for finance. Beyond lending requirements, there are also several strategic and administrative advantages to having a corporate trustee. In most cases we can seek approval, subject to these changes if needed.

Similarly, your Bare trust will require a corporate trustee. Please ensure your trustee for the SMSF is not the same as the Bare Trust.

Yes, your self-managed super fund can purchase a residential property as an investment, but strict rules apply. The property cannot be bought from you, your relatives, business partners, or any associated companies or trusts – it must be arm’s length. It also cannot be lived in by you or any related parties it must be held purely for investment purposes. If, at a later stage, you wish to live in the property, it would first need to be transferred out of the SMSF. This could be done either by purchasing the property from the fund at market value or, if you meet a condition of release, by receiving it as a lump sum benefit. Independent advice is recommended before proceeding.

Obtaining pre-approval for an SMSF loan may help speed up the purchase process and avoid costs associated with establishing an SMSF if approval is not granted. This step typically involves providing two years of financial statement or payslips, personal and business tax returns (if applicable), and superannuation statements, with loan processing times generally ranging from 3 to 4 weeks.

A director identification number is required for anyone becoming a director of a new company. If one has not yet been obtained, it must be applied for, as the corporate trustee cannot be established without it.

It is recommended to establish the SMSF prior to purchasing, bearing in mind that documents usually require physical signatures and postal delays may occur, along with random checks and biometric testing by the ATO. The establishment process may take between two and ten weeks. Setting up the Bare Trust corporate trustee concurrently with the SMSF allows most documents, except for the finalised bare trust deed, to be executed together. In addition, whilst SMSF Mecca can assist in establishing your borrowing power, a formal pre-approval will only be provided when the SMSF is established from most lenders.

Existing superannuation funds can be rolled over, which typically requires 3 to 10 days.

The purchase contract should be signed correctly and the bare trust documents prepared to align with the contract terms.

Allow approximately up to 8 weeks for processing between signing the contract and settlement.

Yes, you can refinance your SMSF loan and should you wish, extend the loan term.

No, borrowing is limited to acquiring new assets only. Increased equity in an existing SMSF property cannot fund the purchase of another property, and each transaction must be independent. You are not permitted to cross-collateralise the property either.

No. It is important to note that, even in the unlikely event your SMSF can secure funding, rezoning or developing the property cannot occur until the loan has been fully repaid and the property title has been transferred from the bare trust to the SMSF.

An incorrect name on the contract means a new contract is needed, which could risk your negotiation position or result in double stamp duty. The required signatories by State are listed below:

To avoid delays and ensure a smooth transaction. Never use the following on the contract for SMSF property purchases with borrowings:

• SMSF Name
• Individual SMSF Trustees
• SMSF Members
• Variations with “or Nominee” unless the property is in Victoria

Errors in this area may result in significant delays, fees and inconvenience; therefore, it is essential to ensure the accuracy of contract details from the outset.

Tax treatment can vary depending on your personal circumstances, so it’s essential to seek independent tax and financial advice tailored to your situation.

In general terms, within the SMSF, income is taxed at a concessional rate of 0% to 15%, depending on whether the fund is in accumulation or pension phase. Capital gains are typically taxed at 0% to 10%, following a similar structure. Fund expenses are deducted from the fund’s income before calculating taxable profits.

Personally, withdrawals made after age 60 are generally tax-free. Before age 60, withdrawals are largely restricted, though certain limited conditions allow access to benefits, which may attract tax. These exceptions are complex and fall outside the scope of this general overview.

Given the technical nature of SMSF taxation both at the fund level and upon withdrawal it is strongly recommended to consult with a qualified accountant or SMSF specialist before making any decisions.

Possibly. The government has paused the rollout of Division 296 the “Super Tax”. The following was proposed via Division 296 tax, which may apply if your total superannuation balance exceeds $3 million across all super funds you’re a member of, as at 30 June 2026. 

To illustrate:

• If you are the sole member of an SMSF holding a $3.5 million property with a $1 million loan, your net super balance is $2.5 million. In this case, you would not be affected.
• If you have a two-member SMSF, and each member holds $2.5 million in net assets, you would also not be affected, as each member’s balance is below the $3 million threshold.
• If your personal super balance is $3.5 million, then you would fall within the scope of Division 296.
• If affected, you would be liable for an additional 15% tax on the growth of your super balance that exceeds the $3 million threshold. For example, if your balance grows from $3.5 million to $3.6 million, tax would apply to the $100,000 growth above the $3 million cap. 
• This would result in a tax liability of $2,500.50, which you could pay personally or elect for your SMSF to pay on your behalf.

This is a proposed measure and may change. The implications can be complex, so it’s strongly recommended you seek independent financial, or tax advice tailored to your circumstances.

*Please seek up to date  information from your accountant as this legislation continues to change.