The lending barrier
A business owner wants their SMSF to acquire premises from a related-party trust, with the operating business continuing as tenant. The fund needs borrowing to complete the purchase.
How we approached it
Have the SMSF adviser and solicitor establish whether the property and proposed related-party transaction are permitted. Compare lenders willing to assess the commercial purchase and proposed limited recourse borrowing arrangement. Review independent valuation, market lease terms, fund liquidity, contributions and the required ownership documents with the relevant advisers.
The outcome
If the legal, fund and lender requirements are met, the SMSF could acquire the premises and lease them to the operating business on appropriate terms. The illustration does not establish that every related-party property can be acquired.
What this means for borrowers
This requires coordinated lending, legal and SMSF advice. A market valuation alone does not establish compliance, and contributions must not be assumed to be available without checking eligibility and limits.
Questions about this case
What should be established before seeking lender approval?
The SMSF’s advisers need to confirm the permissibility of the property acquisition and proposed structure. Lending assessment should then use the documented valuation, lease, fund position and borrowing arrangement.
This is an illustrative scenario comparable to deals we have handled for our clients. Figures and outcomes are examples; lending remains subject to individual assessment.