Bare Trust
What is a Bare Trust in SMSF?
A Bare Trust is created when a Self-Managed Super Fund (SMSF) borrows money to purchase property under limited recourse borrowing arrangements (LRBA). The Bare Trust legally holds the property on behalf of the SMSF until the loan is fully repaid, at which point the legal title is transferred to the SMSF.
At SMSF Depot, we help you structure your SMSF property investments correctly from the start, including setting up the required Bare Trust structure.
Why You Need a Bare Trust
If your SMSF is planning to invest in property using borrowed funds, it must establish a Bare Trust to meet compliance requirements under the Superannuation Industry (Supervision) Act (SIS Act).
Without this structure:
Your SMSF may breach super laws
The investment could be deemed non-compliant
You risk losing significant tax benefits
How the Structure Works
The structure includes:
SMSF Trustee – controls the SMSF
Bare Trustee – holds legal title of the property in trust
Property Title – held by the Bare Trustee on behalf of the SMSF
Loan Agreement – between the lender and the SMSF trustee
The SMSF receives all income, covers expenses, and claims depreciation and tax benefits. The Bare Trustee does not participate in any investment decisions or cash flow management.
Key Compliance Requirements
The SMSF must only acquire a single acquirable asset under the Bare Trust
Legal title remains with the Bare Trustee until the loan is paid off
All documentation must reflect the Bare Trust structure correctly
The SMSF must receive the full economic benefit
The SMSF receives all income, covers expenses, and claims depreciation and tax benefits. The Bare Trustee does not participate in any investment decisions or cash flow management.
Bare Trust Setup Services at SMSF Depot
At SMSF Depot, we handle the entire process of setting up a compliant Bare Trust, including:
Drafting the Bare Trust Deed
Establishing the corporate trustee (if needed)
Liaising with your lender or broker
Ensuring the structure meets ATO and legal guidelines
💼 Expertise you can trust: 12+ years of SMSF administration experience.
Get Started Today
If your SMSF is planning to borrow and invest in property, don’t risk getting the structure wrong. Contact SMSF Depot for professional Bare Trust setup and SMSF property guidance.