The Mortgage Agency

SMSF Loans – Setting Up Your SMSF for Commercial Property

Self-managed super funds (SMSFs) are an enticing choice for Australians who want to take control of their retirement savings. In particular, the option to apply for a self-managed super fund loan to invest in property is an especially exciting opportunity.

 

August 2026 brought changes to SMSF loans that it’s important to be aware of. The main point to be aware of is that SMSFs will no longer be able to establish a new limited recourse borrowing arrangement (LRBA) to acquire residential property.

 

What a SMSF loan can do is provide you with the finances to buy a new commercial investment property that you might not have been able to purchase otherwise. This gives you more opportunities to build your retirement fund and secure your future.

 

In this article, we’ll discuss the 2026 changes to SMSF loans that you need to be aware of. We’ll also provide more information about SMSF loans and their benefits. 

 

At The Mortgage Agency, we believe everybody has the right to a loan. Our experienced brokers will provide personalised support to help you secure a SMSF loan that aligns with your needs. As a nationally accredited partner of multiple leading lenders, we have the expertise to get your loan application over the line and help you grow your nest egg.

 

Want to learn more? Book a discovery session with our Director Tony Xia today, or call The Mortgage Agency on 0423 718 612. We’ll be on hand to answer any questions you may have.

2026 changes to SMSF loans

This year has seen big changes to SMSF loans, and it’s important to be aware of them. Essentially, limited recourse borrowing arrangements (LRBAs) entered into on or after 10 August 2026 can only be used to acquire business real property. 

What does that mean? From August 2026, SMSFs will no longer be able to establish a new LRBA to acquire residential property.

In addition: 

  • The SIS Act is amended: On 26 June 2026, the Superannuation Industry (Supervision) Act 1993 (known as the SIS Act) was amended.
  • Residential SMSF loans are banned: from 10 August 2026, SMSFs can no longer borrow funds to buy residential property.
  • Available cash: SMSFs can still invest in residential property outright if they have the cash to do so.
  • Commercial is unaffected: SMSF loans for commercial properties are still available.
  • Already signed? Contracts for residential SMSF loans signed before 10 August 2026 are unaffected, and existing loans can still be refinanced.

Property types qualifying for commercial SMSF loans

The following property types qualify as ‘commercial’ for SMSF loan purposes:

  • Offices and warehouses
  • Retail shops and showrooms
  • Factories and industrial units
  • Medical, dental, and allied health practices
  • Farms genuinely used to run a business

 

Hobby farms and lifestyle blocks don’t qualify, even if you call them commercial, per SMSF Australia’s business real property test.

two men shaking hands and a miniature house in between

What is a self-managed super fund (SMSF)?

Now that you’re across the key updates, let’s go back to basics. A self-managed super fund (SMSF) is a private super fund that you manage yourself. It allows you to control your retirement savings and decide how to use them. To date, more than 1.2 million Australians have used SMSFs to take control of their retirement savings.

You can set a SMSF up either as an individual or a family (up to a maximum of six members). The fund holds a single Australian Business Number (ABN) and bank account; each member needs their own Tax File Number (TFN). In addition, every SMSF will need to appoint a trustee who will take authority over investment decisions and financial management.

Know that there are rules and regulations surrounding how you use and maintain your fund, so it’s important to know what you’re doing and seek guidance from an experienced licensed adviser.

For instance, as you’re entirely responsible for how you use the money, you’ll need to ensure you comply with tax and super laws. You’ll also need to ensure your SMSF has sufficient funds to cover the purchase price, stamp duty, legal fees, and any ongoing fees before you invest in a property.

If you’re looking to invest but don’t have the money in your SMSF to buy the property outright, a smart way to secure the funds you need is by taking out a SMSF loan.

What is a SMSF loan?

A SMSF loan, or limited recourse borrowing arrangement (LRBA), is a loan that allows your SMSF to borrow money to invest in a commercial property that you may not have been able to purchase outright.

When your fund takes out a SMSF loan to buy a commercial property, that property will be held in a custodian trust until you repay the loan. You’ll then make monthly payments to pay back what you owe, accounting for any added interest. Know that your SMSF can only purchase one asset with the loan, and you’ll need to identify that asset before you apply.

As SMSFs are heavily regulated, you’ll need to comply with rules set by the Australian Taxation Office (ATO). For instance, as the SMSF trustee, you must be able to prove that your investment serves no purpose other than to provide retirement income.

That said, if you work with a reputable provider that can offer you expert guidance, SMSF lending offers an excellent way for you to grow your retirement fund through smart investment opportunities.

The benefits of a commercial SMSF loan

Although the regulations around residential borrowing have changed, SMSF loans remain a powerful wealth-creation tool when focused on commercial real estate.

Here is why commercial SMSF loans offer compelling advantages for fund trustees:

  • Higher rental yields: Commercial property typically delivers stronger rental yields (5% to 8%) compared to residential real estate (3% to 5%), driving faster growth and cash flow within your fund.
  • Own your business premises: If you own a business, your SMSF can buy your commercial building and lease it back to your business at commercial market rates. Instead of paying rent to a landlord, your business pays rent directly into your own super fund.
  • Tax advantages on returns: Rental income inside your fund is taxed at a maximum concessional rate of 15%. Once your fund moves into the pension phase, capital gains and rental returns can become 0% tax-free.
  • Portfolio diversification: Adding commercial real estate provides physical asset backing and stability, balancing out fund portfolios that are often heavily weighted toward shares and cash.
  • Long-term asset ownership: Once the limited recourse loan is fully paid off, the property and all future capital growth and rental revenue belong 100% to your SMSF to support your retirement.

Working with The Mortgage Agency to obtain a SMSF loan

Commercial SMSF loans are slightly more complex than standard mortgages, and there’s a lot to consider when considering SMSF rules and government legislation.

That’s why it’s important to work with an experienced mortgage broker like The Mortgage Agency who can make the process easier.

We can help you secure a loan for commercial properties. Our service is streamlined and straightforward. Here’s how the process usually works.

  • Get in touch: We’ll discuss your goals and whether a SMSF loan is the right way forward.
  • Check your eligibility: We’ll confirm that your SMSF is ATO-compliant, has a valid trust deed, an investment strategy that supports the purchase, and sufficient funds beyond the deposit.
  • Gather your documents: You’ll need your SMSF trust deed, custodian trust deed, contract of sale, and audited financial statements.
  • Confirm your borrowing power: SMSF loans typically have a lower loan-to-value (LVR) ratio than a traditional home loan, meaning you’ll need to contribute more toward the property than usual. You can usually borrow anywhere between 50% and 80% of the value for a commercial property, depending on the type of security provided. However, this varies from lender to lender.
  • Compare lenders: Requirements and rates vary by lender, so we’ll strategise to help you secure a SMSF loan that is in your best interests.
  • Apply and settle: We’ll handle the paperwork and communication with the lender through to settlement.
  • Ongoing support: Your circumstances change, and so does the market. We are here to provide ongoing support. 

Book a discovery call today to get started.

Eligibility criteria to consider

Here are some of the typical requirements you’ll need to meet for SMSF lending:

  • You must have an existing SMSF that is compliant with ATO regulations. For instance, you should keep up-to-date records and have a valid trust deed.
  • You’ll need to have enough funds in your SMSF to cover the application fee, plus any unforeseen costs, property maintenance expenses, and some of your loan repayments.
  • You must be able to prove that your investment strategies align with your retirement objectives.

In addition, your lender will typically set a loan-to-value limit, meaning you’ll need to pay a deposit on the property. Your lender may also examine your credit history and the commercial property you’re buying to assess your eligibility.

Requirements differ from lender to lender. When you partner with the Mortgage Agency, we’ll offer personalised guidance to help you find a borrowing arrangement that aligns with your circumstances. 

Why choose us for your SMSF loan?

When you work with The Mortgage Agency, we’ll help you through every stage of the SMSF loan process. Our brokers can offer:

  • Help with choosing the right commercial property for your circumstances
  • Advice on how much money you’ll need to put down as a deposit
  • Analysis of comparison rates to help you find a loan with a low rate
  • Guidance on how much you’ll be allowed to borrow
  • Advice on choosing between a fixed rate or variable rate
  • Tips to improve borrowing power
  • A strategy to help you secure a SMSF loan that is in your best interests.

Here are five reasons we’re the broker you’ve been holding out for:

  1. Expertise: We’ve been supporting Australian investors with reliable, trustworthy guidance since 2011.
  2. A large network: We’re accredited with multiple lenders and work with an extensive network of accountants, solicitors, and financial advisers.
  3. Personalised service: We’ll adapt our approach to build a strategy tailored to your unique financial circumstances.
  4. Efficiency: We pride ourselves on our speed and efficiency. We won’t make you wait six months to secure your funding.
  5. Safety: We only recommend opportunities that will be best for you. Our experts will tell you outright if a lender isn’t the right fit.

Looking to pivot your SMSF strategy from residential to high-yield commercial property? Book your free discovery call with Tony Xia today. Alternatively, call us on 0423 718 612 for more information. One of our lending specialists will be on hand to talk through your options.

Please note:

  • When setting up a SMSF, you should ensure you seek proper advice from a licensed professional such as a Financial Planner or Accountant to ensure this product or strategy is well-suited for you.
  • All taxation-related questions around a SMSF should be advised by your accountant.

FAQs

Yes, if you’re buying outright with existing fund cash. What’s banned from 10 August 2026 is borrowing funds to buy a residential property. Loan contracts signed before 10 August 2026 are unaffected.

Not quite. The property still has to pass the sole purpose and business real property tests, and most lenders won’t finance vacant land or property outside Australia.

You should budget for property transfer duty, legal fees, and ongoing SMSF audit and accounting costs.

Most SMSF loans settle in four to eight weeks, depending on your fund’s structure and how quickly documents come together.

When you work with The Mortgage Agency, we’ll speed up the process by ensuring you’re matched with a lender likely to accept your application.

It takes around four to six weeks from start to finish. This gives you time to prepare a Statement of Advice, set up your trust deed, register with the ATO, and invest your money into the fund.