How the arrangement works
Your SMSF buys the commercial property and leases it to your business at market rent. The rent goes into your super fund, building your retirement balance, while the business keeps occupying the premises it relies on.
The lending structure
An SMSF can only borrow through a limited recourse borrowing arrangement. The property is held in a separate bare trust until the loan is repaid, and the lender can only recover the property itself if the loan defaults, not the fund’s other assets.
Because of that limited recourse, lenders generally require a larger deposit than for a standard commercial loan and look closely at the fund’s liquidity after settlement.
What lenders assess
Expect lenders to review the fund’s balance, contributions history, the proposed lease and rent, and the fund’s ability to keep paying the loan if the tenant business has a slow year.
Before you start
Speak with your accountant or SMSF adviser about whether this suits your fund. Then we can confirm deposit and liquidity requirements across the specialist lenders before you sign a contract.
General information only. It does not consider your objectives, financial situation or needs. Speak with a licensed adviser and your accountant before acting. See our Disclaimer.
