SMSF structure
SMSF bare trust: how LRBA property loans work
If your SMSF borrows to buy property, super law requires the property to be held inside a separate bare trust until the loan is paid off. This is the structure that makes Limited Recourse Borrowing Arrangements (LRBAs) legal under section 67A of the SIS Act. From 10 August 2026, new LRBAs over real property are limited to business real property — so new bare trusts are established for commercial purchases, while existing residential LRBAs set up before that date are grandfathered and continue unchanged.
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How the bare trust fits into an SMSF property purchase
Under an LRBA the lender's recourse is limited to the single asset being acquired — they cannot pursue the rest of the SMSF's assets if the loan defaults. To make that work legally, the asset has to be held by a separate legal entity (the bare trustee) on behalf of the SMSF. The SMSF beneficially owns the asset and pays the loan; the bare trustee just holds legal title.
Since the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, an SMSF cannot enter into a new LRBA to acquire residential property on or after 10 August 2026. New bare trust structures are therefore for commercial (business real property) purchases. Residential property can still be acquired outright with fund cash — no bare trust needed — and any residential LRBA entered into before 10 August 2026 keeps running on its existing terms, including refinances and normal loan servicing.
Once the loan is fully repaid, the bare trustee transfers legal title to the SMSF trustee. In most states this final transfer is exempt from stamp duty under the LRBA concession, provided the bare trust deed and loan documents were set up correctly from day one. This is where most LRBA disputes happen — get the structure wrong at the start and you can lose the concession at the end.
easySMSF includes the bare trust deed and bare trustee Pty Ltd in our LRBA setup package, and provides full ongoing administration, loan reconciliation and audit support for grandfathered residential arrangements.
- Bare trust deed drawn from current SIS Act and ATO guidance
- Bare trustee Pty Ltd registered with ASIC as a special-purpose company
- Lender-ready documentation — works with the major SMSF property lenders
- State-specific stamp duty handling (VIC, NSW, QLD, WA, SA concessions)
- Continues to work for refinances and partial loan repayments
- Audit-ready holding trust accounts from year one
Frequently asked questions
General advice warning
Figures shown are illustrative only and based on the inputs and assumptions you provide. They are general information, not personal financial product advice. Consider your objectives, financial situation and needs, and seek personal advice from a licensed financial adviser before acting. easySMSF does not hold an Australian Financial Services Licence (AFSL).