What is a limited recourse borrowing arrangement (LRBA)?
A limited recourse borrowing arrangement (LRBA) is the only way a self-managed super fund can borrow to invest. The fund borrows to buy a single asset — often property — which is held in a separate holding trust until the loan is repaid. “Limited recourse” means that if the loan defaults, the lender can only claim that one asset, not the rest of the fund.
By Justin Porrins, CFP® · SMSF Specialist Adviser™ · Last reviewed 25 June 2026
How it’s structured
The borrowing must be for a single acquirable asset, held in a separate holding (bare) trust, with the SMSF holding the beneficial interest. The rules sit under section 67A of the SIS Act, and they’re strict — for example, you generally can’t use borrowed money to improve the asset, only to maintain or repair it.
Where it’s powerful — and unforgiving
Holding business premises or an investment property inside super through an LRBA can be a strong structuring move. But a mis-structured arrangement is expensive to unwind, and the compliance margin for error is thin. This is specialist territory — exactly the kind of architecture that should be built right the first time.
Common questions
Can an SMSF borrow to buy property?
Yes, but only through a complying limited recourse borrowing arrangement. The property is held in a separate holding trust until the loan is repaid, and the borrowing must meet the rules in the SIS Act.
What does “limited recourse” actually mean?
It means the lender’s claim if the loan defaults is limited to the single asset bought under the arrangement. The fund’s other assets are protected, which is the safeguard that makes SMSF borrowing possible at all.
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