Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
SMSF Loan Requirements, The Complete Checklist
Borrowing inside an SMSF is subject to strict requirements from multiple directions, the ATO (superannuation law), the lender (credit policy) and the state (stamp duty and land title rules). Here is the complete picture.
John's lending insight: Requirements
Most SMSF loan applications that get into trouble do so because of one missing piece, usually the trust deed lacking a borrowing provision, or the bare trust being set up after exchange rather than before. I go through this checklist with every client before we lodge an application. Prevention is far cheaper than fixing problems at settlement.
Fund Eligibility Requirements
- Trust deed must permit borrowing: The SMSF trust deed must explicitly authorise the trustees to borrow money. Many older deeds (pre-2007) don't, a deed amendment costs ~$500 and takes 1–2 weeks
- Compliant fund status: The fund must be compliant with ATO, all annual returns lodged, annual audit completed, no outstanding compliance notices
- Investment strategy: The fund's investment strategy must document that property investment is consistent with the fund's objectives, risk profile and member circumstances
- Minimum assets: Most lenders require $200,000–$300,000 in liquid SMSF assets after the deposit and costs are paid
- Corporate trustee preferred: Many lenders prefer or require a corporate trustee (Pty Ltd) rather than individual trustees, easier to handle trustee changes and generally better governance
Property Requirements
- Single acquirable asset: The LRBA must relate to a single asset, a single property on a single title
- Sole purpose test: Residential property cannot be used by fund members or related parties before retirement
- No improvements while loan is in place: Repairs and maintenance are permitted; capital improvements (additions, extensions, conversions) are not
- Business real property (commercial): Can be leased to a related party at market rent, must be used wholly in a business
- Standard residential or commercial: Most lenders exclude rural, high-density studio apartments under 50sqm, student accommodation and serviced apartments
Structural Requirements
- Bare trust deed: A solicitor must prepare a bare trust (holding trust) deed before settlement. The property legal title sits in the bare trustee's name until the loan is repaid
- Bare trustee: Usually a separate company (corporate bare trustee), keeps the asset separate from the SMSF and simplifies the title transfer on loan repayment
- SMSF bank account: All loan repayments must come from the SMSF bank account, not members' personal accounts
- Separate from personal assets: The SMSF loan and property must be kept entirely separate from members' personal finances
Lender Requirements
- Deposit: Typically 20–30% of purchase price (plus costs) from SMSF funds
- Serviceability: The fund must demonstrate ability to cover loan repayments from super contributions and rental income
- Documentation: SMSF trust deed, bare trust deed, last 2 years of SMSF tax returns and financial statements, member contribution history, rental appraisal
- Building insurance: In the bare trustee's name, required before settlement
- Independent financial advice: Some lenders require evidence of financial advice; all strongly recommend it
Ongoing Compliance Requirements
- Annual SMSF audit by an approved auditor
- Annual tax return lodged with the ATO
- Investment strategy reviewed annually and documented
- Market rent review at least annually (especially for commercial related-party leases)
- All income deposited to SMSF account; all expenses paid from SMSF account
- Minutes of trustee decisions kept on file
