Looking to invest in property for your future and wondering if a Self-Managed Super Fund (SMSF) is the best way? You wouldn’t be alone… 

Stats released by the ATO in May 2023 report that there are 606,217 SMSFs, with 1,136,234 members of SMSFs and a total estimated asset amount of $889.5 billion. [Source: ATO]

Investing in property with an SMSF has its advantages and challenges, and no two cases are the same, so it’s always best to consult your personal financial advisor, accountant, mortgage broker etc. But it’s also good to have a basic understanding of the ins and outs of property investment with SMSF – whether you’re a seasoned investor or a beginner. 

What is an SMSF?

A Self-Managed Superannuation Fund (SMSF) is a private superannuation fund that provides its members with control over how their retirement savings are invested. Unlike retail or industry super funds, an SMSF is managed by its members, who act as trustees responsible for investment decisions and compliance with superannuation laws.

Benefits of Investing in Property through an SMSF

1. Control and Diversification: By investing in property through an SMSF, you gain greater control over your investment decisions. This flexibility allows you to diversify your superannuation portfolio, reducing risk by allocating funds across different asset classes, including property.

2. Tax Advantages: SMSFs offer attractive tax benefits. Income earned by the SMSF’s assets, including rental income from property, is generally taxed at a concessional rate, potentially resulting in significant tax savings compared to other investment structures.

3. Capital Growth and Rental Income: Property investment can provide both capital growth and rental income, making it an attractive long-term investment option for building wealth within your SMSF.

4. Asset Protection: In certain circumstances, investing in property through an SMSF may provide an additional layer of asset protection for your retirement savings. This can be beneficial in safeguarding your funds from potential creditors.

5. Long-Term Retirement Planning: Investing in property through an SMSF aligns with long-term retirement planning, as property values generally appreciate over time. Property can provide a stable income stream during retirement, contributing to a comfortable lifestyle.

Important Considerations and Compliance with an SMSF

1. Sole Purpose Test: The primary purpose of an SMSF is to provide retirement benefits to its members. Any investment, including property, must align with this sole purpose test. Therefore, the property cannot be used for personal use or benefit before retirement.

2. Borrowing Restrictions: If you plan to use borrowed funds to acquire property through your SMSF, specific rules apply. The borrowing arrangement must comply with the Limited Recourse Borrowing Arrangement (LRBA) regulations, and the property must be held in a separate trust (bare trust) until the loan is repaid.

3. Costs and Fees: Setting up and maintaining an SMSF involves certain costs and ongoing administrative responsibilities. It is essential to factor in these expenses when considering property investment through an SMSF.

4. Property Selection: Choosing the right property is crucial to the success of your investment. Conduct thorough research, consider factors like location, potential rental yield, and long-term capital growth prospects.

As specialists and experienced mortgage brokers, we are here to support and guide you through your property investment journey via an SMSF. Investing in property through an SMSF can be a powerful wealth-building strategy for your retirement years, but it’s not a decision to take lightly. It needs careful planning, compliance with superannuation regulations and strategic financial advice.

If you are considering property investment through an SMSF or have any questions about this investment approach, we would love to explore the possibilities with you, assess your financial goals, and develop a tailored strategy to maximise the potential of your SMSF.

Contact us today, and let’s take the first step towards securing a prosperous and financially secure retirement through property investment in your SMSF. Remember, informed decisions are the key to building a brighter future for yourself and your loved ones.


Disclaimer: This article is for educational purposes only and not professional financial advice. Please seek personal advice before making any financial decisions. The views expressed are the author’s own and not affiliated with any organisation. The author is not responsible for any losses or damages resulting from reliance on the information provided