Borrowing within your SMSF to purchase a residential investment property. This is one of the most popular SMSF lending strategies — but it comes with strict rules.
Key Features:
- Property must be for investment only (cannot be lived in by members or related parties).
- Must be purchased through a Limited Recourse Borrowing Arrangement (LRBA).
- Held in a Bare Trust, with the SMSF as the beneficiary where there’s lending requirement
- Rent received goes into the SMSF, and loan repayments are made from SMSF income.
Ideal For:
- SMSFs looking to diversify into property.
- Investors wanting to hold residential real estate as part of their retirement strategy.
Considerations:
- Must maintain enough liquidity in the SMSF to service the loan.
- Property improvements are restricted while the loan is in place.
- Ongoing compliance and professional advice are essential.
