How Does Limited Recourse Borrowing Work in an SMSF?

Quick Answer

Limited recourse borrowing allows an SMSF to borrow funds to purchase a single asset, such as property, using a structure where the lender's recourse is limited to the asset itself. This means the lender cannot access other SMSF assets if the loan defaults. Governed by the Superannuation Industry (Supervision) Act 1993, it's crucial to ensure compliance with all legal requirements.