Make Your Super
Work Harder.
An SMSF is one of the most tax-efficient vehicles available to Australian investors — and with a correctly structured Limited Recourse Borrowing Arrangement, it can also be one of the most powerful. The big four banks left this market. Tenfold knows exactly who stayed, and how to get your application approved.
SMSF Tax Advantage — At a Glance
Tax outcomes depend on individual circumstances. Always obtain advice from a qualified SMSF accountant or financial adviser.
SMSF Property Lending — What You Need to Know in 2026
- ✦ In 2026, SMSF residential investment property loans are available up to 80% LVR through select specialist non-bank lenders — ANZ, CBA, NAB, and Westpac have all exited this market.
- ✦ Rental income earned inside a complying SMSF is taxed at a flat 15% — compared to up to 47% personally — making SMSF property one of Australia's most tax-efficient investment vehicles.
- ✦ A Limited Recourse Borrowing Arrangement (LRBA) is the only lawful way for an SMSF to borrow to purchase property — legal title must be held in a separate bare trust until the loan is fully repaid.
- ✦ Once an SMSF transitions to pension phase, all income and capital gains become entirely tax-free under ECPI rules — a property sold in pension phase can realise its full capital gain with zero tax.
The Big Four Banks Have Left.
Specialist Lenders Have Filled the Gap.
ANZ, CBA, NAB, and Westpac all withdrew from SMSF lending — and haven't returned. What remains is a specialist lending market of non-bank institutions that have built genuine expertise in LRBA structuring, SMSF compliance, and the nuances of lending into a regulated superannuation environment. Tenfold maintains active relationships across this entire market.
Six Reasons Investors Use Their
Super to Buy Property
An SMSF with a correctly structured LRBA combines the power of leverage with the significant tax advantages of the superannuation environment.
Concessional 15% Tax Rate
Rental income earned inside a complying SMSF is taxed at just 15% — significantly below the personal marginal tax rate for most investors, which can reach 47% including the Medicare levy. For a high-income earner generating $60,000 in annual rental income, the difference in tax between personal ownership and SMSF ownership can be tens of thousands of dollars per year.
10% Effective Capital Gains Tax
When an SMSF holds a property for more than 12 months and sells, the fund receives a one-third CGT discount — bringing the effective tax rate from 15% down to just 10%. For an investor selling a property with a $400,000 capital gain, the CGT saving compared to personal ownership at the top marginal rate is substantial. And if the property is sold in pension phase, the gain is entirely tax-free.
Zero Tax in Pension Phase
Once an SMSF member transitions to the retirement phase, all income and capital gains from assets supporting that pension become entirely exempt from tax under the Exempt Current Pension Income (ECPI) rules. A property held within an SMSF and sold in pension phase can realise its full capital gain with zero tax — one of the most compelling wealth accumulation outcomes available to Australian investors.
Buy Your Own Business Premises
One of the most powerful — and least understood — SMSF strategies is the ability to purchase business real property and lease it back to your own business. The SMSF receives commercial rent (taxed at just 15%), the business gets a genuine commercial deduction, and the property grows inside the low-tax superannuation environment. This strategy is used extensively by small business owners, medical practitioners, and professional service firms.
Asset Protection
Superannuation assets are generally protected from creditors in bankruptcy — a meaningful benefit for business owners, professionals, and anyone operating in an environment where personal financial risk exists. Property held inside an SMSF sits within the superannuation environment, providing a structural layer of protection that personal ownership or trust structures cannot replicate in the same way.
Investment Control & Leverage
An SMSF gives members direct control over the fund's investment strategy — including the decision to hold direct property. Combined with an LRBA, members can leverage their accumulated super balance to acquire an asset significantly larger than their cash balance alone would allow. This amplifies both the rental income and the capital growth potential within the tax-advantaged super environment.
How an LRBA Actually Works
A Limited Recourse Borrowing Arrangement is the only lawful way for an SMSF to borrow money to purchase an asset. Understanding the structure is essential before you proceed.
SMSF Trustees
Members control the fund strategy and instruct the trustee to borrow
Lender
Provides limited recourse loan secured over the bare trust — not the SMSF's other assets
Bare Trust
A separate holding trust holds legal title until the loan is repaid — then transfers to the SMSF
Property
SMSF holds beneficial interest, receives all rental income, and takes full ownership on loan repayment
Establish & Review Your SMSF
Your SMSF must be correctly established with an investment strategy that permits direct property. The fund deed must allow borrowing. Tenfold reviews your structure before any lender approach.
Set Up the Bare Trust
A separate bare trust is established with a corporate trustee to hold legal title to the property during the loan term. Your solicitor prepares this — we coordinate with them to ensure the lender's requirements are met.
Finance Application
We prepare and lodge a full LRBA application, including the SMSF's financial statements, investment strategy, trust deed, bare trust deed, and the property details. Lenders assess the SMSF's contribution history, cash flow, and balance alongside the property.
Settlement & Title Transfer
At settlement, legal title vests in the bare trust. The SMSF holds the beneficial interest and receives all rental income. When the loan is fully repaid, the bare trust transfers legal title directly to the SMSF.
Residential, Commercial &
Business Real Property
SMSFs can purchase a range of property types — but strict rules govern what you can and cannot acquire. Here's what is permissible.
Residential Investment Property
A standard residential investment property — house, apartment, townhouse — that is not occupied or used by any fund member or related party. The property must be purchased and held purely as an investment, at arm's length from all members. The fund cannot rent the property to a member, their relatives, or related parties.
Commercial Investment Property
Commercial properties — offices, warehouses, retail premises, industrial units — can be held inside an SMSF. Unlike residential, commercial property can be leased to a related party (including a member's business) provided the lease is at arm's length market terms. This is the basis of the popular business real property strategy.
Business Real Property (Your Premises)
One of the most compelling SMSF strategies: your SMSF purchases the premises your business operates from, then leases it back to your business at market rent. The business receives a full tax deduction for rent paid. The SMSF receives rental income taxed at 15%. Capital growth accumulates in the low-tax super environment. Widely used by medical, legal, accounting, and trade businesses.
Critical Rules Every
SMSF Borrower
Must Understand
SMSF lending is governed by strict superannuation legislation. Getting any element wrong can trigger a compliance breach, tax penalties, or force an unwanted sale. These are the considerations that matter most.
- The loan must be "limited recourse." An LRBA is strictly limited recourse — meaning if the SMSF defaults, the lender can only claim against the asset held in the bare trust, not against any other assets of the fund. This protects the broader SMSF but also means lenders price the facility conservatively. Any loan that gives the lender recourse beyond the single asset is non-compliant.
- You cannot improve the asset under the loan. While the loan is in place, you can maintain the property but you cannot make improvements that change the character of the asset. A new kitchen is maintenance. Adding a bedroom is an improvement — and prohibited under the LRBA rules. Once the loan is repaid and title transfers to the SMSF, improvements can proceed freely.
- Members cannot live in or use the property. Residential property purchased via an LRBA cannot be used by any fund member or related party — not even temporarily. This is one of the most commonly breached rules and can have severe consequences for the fund's complying status. Commercial property can be used by a member's business, but only under a formal arm's length lease at market rent.
- The SMSF must have sufficient cash flow to service the loan. Lenders assess the SMSF's contribution history, existing assets, and projected rental income against the loan repayments. The fund must demonstrate it can service the debt without requiring members to make additional contributions. A fund with a low balance relative to the purchase price may not qualify regardless of the member's personal income.
- The Transfer Balance Cap limits pension phase benefits. From 1 July 2023, the Transfer Balance Cap is $1.9 million per person — the maximum that can be moved into the tax-free pension phase. Investors planning to hold substantial property inside an SMSF should model their total super balance trajectory carefully to maximise the amount that transitions tax-free.
- The Sole Purpose Test must be satisfied at all times. Every decision an SMSF makes — including property acquisition — must be made for the sole purpose of providing retirement benefits to members. Purchasing a property because you want a holiday home, or leasing it below market rent to a family member, will breach the sole purpose test and place the entire fund's compliance at risk.
- Rates are higher than standard investment loans. SMSF LRBA rates typically sit 1.2–1.5% above comparable standard investment property rates. This premium reflects the additional complexity and the limited recourse nature of the security. Model the full interest cost into your SMSF's projected cash flow — and always check whether the yield on the property is sufficient to service the debt comfortably.
Specialist SMSF Lenders —
The Market the Big Banks Left
The major banks exited SMSF lending years ago. What remains is a sophisticated panel of specialist lenders with deep expertise in LRBA structures — and Tenfold has active relationships with every one of them.
Specialist Non-Bank Lenders — Residential & Commercial SMSF Loans
Second-Tier & Regional Banks
SMSF lender policies, rates, and LVR limits change regularly. Tenfold maintains live lender intelligence so your application is always directed to the right institution — at the best available terms.
Steven Rider is the founder of Tenfold and a rare multi-disciplinary expert who holds both CA and CPA designations alongside a full mortgage broking licence. With over 25 years advising Australian property investors, he brings together tax strategy, portfolio structuring, and specialist finance in a single integrated service — the kind of holistic advice that most accountants and brokers simply cannot offer alone.
Ready to Put Your Super
to Work in Property?
SMSF property finance rewards investors who get the structure right from the start. Book a strategy session with Tenfold — we'll review your fund, identify the right lender, and map the clearest path from your super balance to a settled property.