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Borrowing to purchase property by a Self Managed Superannuation Fund

This information is for those considering the purchase of a property through their Self Managed Superannuation Fund (SMSF) and it provides a very basic guide to IMB’s SMSF lending. It is important that you assess legal, financial and taxation matters with your professional advisers. 

SMSFs can borrow money to purchase real estate with some conditions and restrictions. For example:

  • a property purchased by a SMSF may not be improved – however repairs and maintenance are allowed (there are specific tax guidelines defining improvements and repairs/maintenance) 
  • each loan cannot cover more than one title – a loan must be for a “single acquirable asset”
  • beneficiaries of the fund may not occupy a residential property owned by a SMSF.

The beneficial owner of the real estate will be the SMSF and the legal owner must be a special trust entity while there is a mortgage associated with the property. In addition, IMB’s SMSF loans are only available to SMSFs which have a company as the trustee of the SMSF.

Frequently Asked Questions about IMB’s SMSF loans

  What is the maximum term of the loan?
Up to 25 years for residential property and up to 15 years for commercial property, or the number of years to retirement of the youngest beneficiary if this is less.
  Can I have interest only?
Yes – interest only repayments are available up to a maximum of 5 years.
  Can I fix the rate?
  • If you don’t already have one, you will need to arrange with your professional advisers (Accountant, Solicitor, Financial Planner etc) to establish a SMSF as well as a special trust entity to hold the property and provide you with advice about a SMSF loan.
  • You will have all of the normal costs associated with buying property and taking out a loan and mortgage
  • IMB’s fees and charges which include an establishment fee, legal fees plus ongoing fees.
  What sort of property can I buy?
Residential investment property or income producing commercial property.
  Can I buy vacant land?
  Can I do a construction or a development?
Developments and Construction – No. “Off the plan” purchases may be considered provided settlement is a single once only payment for a completed building.
  Can I use rent and superannuation contributions to service the loan?
Yes, both rent and superannuation contributions can be used to repay the loans and will be taken into account by IMB when assessing serviceability
  Can I refinance an existing SMSF loan?
If you have a SMSF loan elsewhere it may be possible to refinance with IMB.
  What will IMB require to assess our application?

Initially, IMB will require the most recent audited SMSF financial statements and a copy of the trust deed.

We will also require evidence that the beneficiaries of the fund could service this loan independently if contributions were not being channelled through the fund.

We may ask for other documentation throughout the process.

For more information on IMB's Self Managed Superannuation Fund call our Business Banking Team on 133 462 or enquire online.

Call 133 462 Ask us a question

1. Other IMB fees and charges may apply.This information is provided as a general guide only and is not advice or a recommendation to enter into any transaction. This information does not take into account your individual situation. You should seek your own professional legal, financial and taxation advice. IMB Ltd makes no representations as to, and accepts no responsibility or liability for, the accuracy or completeness of this information. IMB lending criteria, terms and conditions, fees and charges apply.

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