SMSF Property Purchase Structure & Requirements

Setting up the right structure is essential when buying property through a Self-Managed Super Fund (SMSF).

In most cases, the recommended approach is to use:

• an SMSF with a corporate trustee, and
• a bare trust (custodian trust) with a separate corporate trustee

This structure is widely accepted by lenders and helps ensure compliance with SMSF borrowing rules. Both entities can typically be established within 1–2 days, with full support provided throughout the purchase process.

A typical Structure of the SMSF borrowing:

How to Buy Property Through an SMSF (Step-by-Step Guide)

Buying property through a Self-Managed Super Fund (SMSF) using a Limited Recourse Borrowing Arrangement (LRBA) involves several important legal and administrative steps. Following the correct process helps ensure your SMSF complies with Australian superannuation and borrowing requirements.

Step 1 – Set Up Your SMSF

Before purchasing a property, you must:

• Establish your SMSF.
• Apply for a Tax File Number (TFN) and Australian Business Number (ABN).
• Open an SMSF bank account.
• Roll over your existing superannuation into the SMSF.

Your SMSF trust deed must allow property investment and borrowing under an LRBA. Your SMSF investment strategy should also include property as an approved investment. If updates are required, these should be completed before proceeding.

Step 2 – Choose the Right Investment Property

Find a suitable residential or commercial investment property.

Before signing any contract, provide us with:

• the property address; and
• an unsigned Contract of Sale.

We will review the documentation to ensure the purchase is structured correctly before you commit.

Step 3 – Confirm Your SMSF Borrowing Capacity

Arrange loan pre-approval with an SMSF lender.

Most lenders offer borrowing of up to 80% Loan-to-Value Ratio (LVR) for residential and commercial properties. For vacant commercial properties, some lenders may also finance the additional 10% GST component, subject to their lending policies.

Step 4 – Establish the Bare Trust Corporate Trustee

A separate company must be established to act as the trustee of the bare trust.

This company is completely separate from the SMSF trustee and exists solely to hold legal title to the property on behalf of the SMSF until the loan is repaid.

Step 5 – Set Up the Bare Trust

A bare trust deed is prepared using the property details.

The deed must be executed and, where required, stamped in accordance with the relevant state or territory legislation before settlement. Stamp duty requirements vary between jurisdictions.

Step 6 – Sign the Contract Correctly

The Contract of Sale must be prepared in the name of the bare trustee, for example:

Trustee Company Name ATF Bare Trust

Correct purchaser details are essential to comply with SMSF borrowing rules and to help avoid unnecessary legal issues or potential double stamp duty.

Step 7 – Pay the Deposit

The SMSF trustee usually pays the 10% deposit from the SMSF bank account.

Ensure the deposit receipt correctly identifies the bare trust trustee as the purchaser.

Step 8 – Finalise Loan Approval

Once your SMSF loan is formally approved, review and sign the lender’s loan documents.

Some lenders require a Legal Practitioner’s Certificate (LPC) before settlement. If you are our client, we can assist in arranging the LPC and guide you through the lender’s requirements to ensure everything is completed correctly.

Step 9 – Complete Settlement

On settlement day, the lender advances the loan funds to complete the purchase.

The SMSF pays the balance of the purchase price together with associated costs, including:

• stamp duty;
• legal and conveyancing fees;
• registration fees; and
• other settlement costs.

Settlement is typically completed electronically through PEXA (Property Exchange Australia), providing a secure and efficient transfer of funds and property ownership.

Need Help Buying Property Through Your SMSF?

At iCare Super, we manage the entire SMSF property purchase process, including:

• SMSF establishment
• TFN and ABN applications
• Corporate trustee registration
• Bare trust establishment
• Contract review
• SMSF loan coordination
• Settlement support

Our experienced SMSF specialists work with your lender, solicitor and mortgage broker to ensure your SMSF property purchase is completed correctly and efficiently.

Disclaimer

This information is general in nature and does not take into account your personal objectives, financial situation, or needs. You should obtain independent professional advice before making any financial or investment decisions. Loan application support and credit assistance (where applicable) is provided by authorised credit representatives of an affiliated entity. iCare Super does not hold an AFSL and does not provide financial product advice or recommend any investments, including property. You are responsible for conducting your own due diligence when dealing with property developers, real estate agents, buyer’s agents, or financial advisers. To the maximum extent permitted by law, iCare Super accepts no liability for any loss arising from reliance on this information.