SMSF commercial property loans for business owners and investorsOwn the premises. Inside your super.

A limited recourse loan

A self-managed super fund can borrow to buy a property through a limited recourse borrowing arrangement. The property is held in a separate holding trust (often called a bare trust) until the loan is repaid, and if the fund defaults the lender can only claim that property, not the fund's other assets.

The loan generally has to be for a single asset, the fund must be allowed to borrow under its trust deed, and the purchase has to be for the sole purpose of providing retirement benefits. These are super law rules: your accountant or SMSF adviser confirms them before you buy.

Leasing the property back to your business

A common reason to borrow in super is a business owner buying the premises their business operates from. Commercial property used wholly and exclusively in a business can generally be leased to a related business, as long as the lease is on proper commercial terms and the rent is at market rate. Your accountant confirms whether your property and lease qualify.

Lenders look closely at that lease, because the rent your business pays the fund usually helps the fund repay the loan.

The fund, not just the property

• The fund's income: rent from the property, plus the members' super contributions. Some lenders count future contributions toward servicing, others limit it.
• The fund's balance and what's left after settlement. Policies differ: one lender on our panel wants at least 10% liquidity left in the fund after settlement, while another sets no liquidity requirement.
• The property itself: its type, location, lease and tenant.
• Maximum LVRs on SMSF commercial loans are generally lower than on a standard home loan. One lender on our panel caps SMSF commercial lending at 75% LVR. Lender policies change, so we check current policy for your scenario.

Plan for more than the deposit

• The deposit and purchase costs come from the fund, so the fund needs enough cash or liquid assets to cover them.
• Stamp duty or transfer duty on the purchase, which varies by state.
• Setting up the holding trust and its corporate trustee, plus legal and accounting fees.
• Lender fees, valuation and ongoing costs such as insurance and the fund's annual audit.
• We list the expected costs in your strategy so there are no surprises at settlement.

Finance and advice work together

Magnus Finance arranges the loan. We don't give financial product advice on whether to set up an SMSF or whether buying property in super is right for you. That's for your accountant or a licensed financial adviser. We work alongside them so the loan, the holding trust and the fund's deed all line up before you sign a contract.

Can my SMSF buy my business premises?

Generally yes, if the property is commercial property used wholly and exclusively in a business and is leased to your business at market rent on proper commercial terms. Your accountant or SMSF adviser confirms this for your situation.

How much deposit does an SMSF need for a commercial property?

It depends on the lender. Maximum LVRs on SMSF commercial loans are generally lower than for home loans, so the fund usually needs a larger deposit, plus enough left over for costs and any liquidity the lender requires after settlement.

Can the SMSF loan be used for renovations?

Super rules limit what borrowed money can be used for. Generally a limited recourse loan can fund repairs and maintenance but not improvements that change the character of the asset. Check with your accountant before planning works.

Does Magnus Finance set up the SMSF?

No. Your accountant or SMSF adviser sets up and advises on the fund and the holding trust. Magnus Finance arranges the loan and works with them so everything lines up.

What does Magnus Finance charge?

In most cases there is no direct cost to you. Magnus Finance is paid a commission by the lender you choose, and we disclose it before anything is signed.