SMSF Property Loans › What is a bare trust and why does my SMSF need one?

What is a bare trust and why does my SMSF need one?

A bare trust, also called a holding or custodian trust, holds the legal title of the property on behalf of your SMSF while the loan is being repaid. It is a required part of the borrowing structure.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

The bare trust is a technical but essential piece of the LRBA. It separates legal title from the fund during the loan, which is how the limited recourse protection works. Setting it up correctly, with the right deeds and at the right time relative to the contract, is critical, and is firmly a job for your legal and SMSF advisers.

The key points

It holds legal title for the SMSF during the loan.
A required part of the borrowing structure.
It supports the limited recourse protection.
Must be set up correctly with professional advice.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.