SMSF Related Party Loan Agreements (LRBA)

Limited recourse loan documents for members, family trusts and related companies lending to their own SMSF to buy property, prepared on the ATO's safe harbour terms.

  • Limited recourse loan agreement between the lender and the SMSF trustee
  • Mortgage from the custodian, prepared and registered
  • Minutes for the SMSF trustee and the custodian
  • Fixed fee of $1,800 + GST, mortgage registration included
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2,000+Matters handled
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100+SMSF purchases
2020Established

Related party lending

When the Lender Is You, Not the Bank

An SMSF can borrow from its own members, or from a family trust or company they control, under a limited recourse borrowing arrangement (LRBA).

It often happens when a bank declines the loan, sometimes days before settlement, or when the members would rather keep the interest in the family. The structure is the same as a bank LRBA: the property is held by a custodian on trust for the fund, and the lender's recourse is limited to that property.

The difference is the tax risk. A related party loan has to be on arm's length terms. If it is not, the income and capital gains from the property can be taxed in the fund at the highest marginal rate. Documenting the loan on the ATO's safe harbour terms is the accepted way to show the terms are arm's length.

This page is general information about the legal documents and is not advice about your fund. Whether to lend to your SMSF, and the tax outcome, are questions for your accountant or licensed adviser.
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ATO safe harbour

The Safe Harbour Terms for Property

A related party loan for real property that follows these terms is accepted by the ATO as being on arm's length terms.

9.35%

Interest Rate

The safe harbour rate for real property for the 2026-27 financial year. The rate is reset each year, or can be fixed for up to 5 years.

15 yrs

Maximum Term

The loan term is capped at 15 years. A refinanced loan keeps the remaining term of the original loan.

70%

Maximum LVR

The loan cannot exceed 70% of the property's market value, so the fund contributes at least 30% from its own money.

Monthly

Principal and Interest

Repayments are made every month and include principal. An interest-only loan is outside safe harbour.

Mortgage

Registered Security

The lender takes a registered mortgage over the property, granted by the custodian.

Written

Signed Agreement

The terms are set out in a written loan agreement, and repayments are actually made in line with it.

What we prepare

What the Fixed Fee Covers

Structure Review

We check the contract, the custodian and the bare trust deed so the loan matches how the property is held.

Limited Recourse Loan Agreement

A loan agreement between the lender and the SMSF trustee on safe harbour terms, with recourse limited to the property.

Registered Mortgage

A mortgage from the custodian in favour of the lender, lodged for registration on title.

Trustee and Custodian Minutes

Minutes recording that the SMSF trustee and the custodian have approved the loan and the mortgage.

Signing and Registration

Signing arranged for every party, with the mortgage registered once the documents are signed.

Records for Your Accountant

Signed copies and the repayment terms, ready for your accountant and the fund's auditor.

Fixed fee

$1,800 + GST
  • Covers the loan agreement, the registered mortgage and the minutes.
  • Disbursements of about $360 in NSW (registration, PEXA, searches and identity checks) are passed on at cost.
  • A bare trust deed or custodian company, if not already in place, is priced separately on our pricing page.

Residential Property After 10 August 2026

From 10 August 2026 an SMSF can no longer enter a new LRBA to buy residential property, whether the lender is a bank or a related party. Commercial property and other business real property are not affected, so a related party LRBA remains available for those purchases.

Residential LRBAs entered before that date continue, and can generally still be refinanced provided the loan balance does not increase. Where a residential purchase crosses that date, the timing of the contract and the borrowing needs to be checked before any documents are signed.

How it works

How It Works

01

Send us the documents

The contract, the SMSF and bare trust deeds, and the loan amount and property value.

02

We review the structure

We confirm how the property is held and flag anything that needs to be fixed before the loan is documented.

03

We prepare the documents

The loan agreement, the mortgage and the minutes are prepared on safe harbour terms and sent for signing.

04

Signing and registration

Once signed, the mortgage is lodged for registration and signed copies go to you and your accountant.

Fixed fee of $1,800 + GST, with turnaround of 3 business days from payment and documents.

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Explore:

Other SMSF property services we provide.

Related pages: SMSF LRBA for Commercial Property · Bare Trust and Custodian Setup · SMSF Property Purchase Solicitor · SMSF Refinance ILA · Bare Trust to SMSF Transfer · Loans, Security and Guarantees · Pricing

SMSF Related Party Loan FAQs

Can I lend my own money to my SMSF to buy property?
Yes, under a limited recourse borrowing arrangement. The property is held by a custodian on trust for the fund, and the loan should be on arm's length terms, which in practice means the ATO's safe harbour terms.
What interest rate do I charge my SMSF?
Under safe harbour, the rate for real property is 9.35% for the 2026-27 financial year. The rate is published each year, and can be fixed for up to 5 years.
What happens if the loan is not on safe harbour terms?
If the terms are more favourable to the fund than arm's length terms, the income and capital gains from the property can be taxed in the fund at the highest marginal rate. Terms outside safe harbour need other evidence that they are arm's length.
My bank pulled out before settlement and we funded it ourselves. Can it still be documented?
Often, yes, but it depends on how the purchase settled: whose name is on title, whether the custodian and bare trust deed were in place, and how the funds were paid. We review those documents first and tell you if anything needs to be fixed before the loan is documented.
Can my SMSF still borrow to buy residential property?
Not under a new LRBA entered on or after 10 August 2026. Commercial property and other business real property are not affected, and existing residential LRBAs can generally still be refinanced.
What does a related party LRBA cost?
A fixed fee of $1,800 + GST, which covers the loan agreement, the registered mortgage and the minutes. Disbursements of about $360 in NSW are passed on at cost. See our pricing page.
Do you advise on whether we should lend to the fund?
No. Whether a loan suits your fund, and the tax treatment for you and the fund, are questions for your accountant or licensed adviser. We prepare and register the legal documents.

Have a question that is not answered here?

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Lending to Your SMSF?

Send us the contract and the fund's details and we will confirm the fixed fee and the documents needed before any work starts.

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