Using SMSF to borrow money in purchasing assets was limited before September 2007. These restrictions were a hindrance to investors. Seeing the potential in the SMSF industry, these rules were revised in 2010. SMSFs can borrow money for property investments using LRBAs. (Limited Recourse Borrowing Arrangements) These can be used to borrow money for property investments, under certain restrictions.
There are certain key points to consider for this arrangement: SMSFs can only be used to purchase a single asset, or groups of assets with the identical market value. The LRBA cannot be used for property improvements, and that the LRBA benefits are reaped by the SMSF trustees, but the ownership is held on trust.
Knowing this together with all the rules and regulations governing property investments ensure that SMSF usage is maximized to its fullest potential.
Read more about this on the SMSF Adviser website.