Buying Property With Your Self Managed Super Fund

Buying Property With Your SMSF

A Self Managed Superfund is a trust fond in which investments are held and managed by its members with the purpose to provide benefits to fund themselves when they retire.
Today more and more people are using their self-managed super fund (SMSF) to buy property, but this decision requires careful consideration. You need to make sure it supports your overall investment strategy and does not put you in any risk.

Today, SMSF is the fastest growing sector in the economy of Australia and this claim is also supported by the reports from the SMSF statistics. One of the most valuable assets held in self-managed superannuation funds is undoubtedly real estate. Therefore, investing the retirement savings (shares, cash and fixed interest) into property is the biggest trend among SMSF trustees nowadays.


There are significant advantages to having a property in an SMSF, including tax – your super fund will be taxed at 15 per cent – which is considerably lower than most people’s personal tax rates.
If the property is sold during the accumulation phase, the capital gains tax is calculated at a discounted rate. If the asset is sold while the super fund is in pension phase, it’s tax free.

However, there are a few things to bear in mind if you plan on setting up an SMSF specifically to buy property, whether it’s residential or commercial.

  • The terms of the lease have to be commercially competitive. The ATO audits and monitors SMSFs to make sure that all arrangements are compliant.
  • In case things get tight and there is a downturn in incomes, you cannot skip the payment for rent. Payments must be full and on time.
  • Compliance of the SMSF depends on regular valuations of the commercial property. This requires a lot of paperwork to be done and it can be a time-consuming activity.
  • The superannuation property investment has to satisfy the “sole purpose” test, which is that its purpose is to provide retirement benefits to the members of the fund.

If you are still thinking whether it is a good idea to make a superannuation property investment, you should know that it all comes down to you making a rational investment decision based on particular facts as well as a third party advice. To ensure you have made the decision possible, it is recommendable that you have a qualified, independent third party whom you will pay to investigate the opportunity and give you their honest opinion.

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