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The largest sector in the Australian superannuation industry currently is self-managed super funds. This is only set grow as well as there are around 32,000 new SMSF’s set up every year.

While people have generally always been able to buy property through self-managed super funds, you generally have not been able to borrow money to do so, until recently. According to AMP Financial Planner Dianne Charman “This has meant that people are now able to use their SMSF to invest in properties they may not have previously been able to afford”.

But be advised that buying a property through an SMSF should not be the reason someone chooses to set up an SMSF. It’s really a set up for people who would like more control of their super.

How to get started

So you’re now curious and considering using your SMSF to purchase a property. Here are a few things to ask yourself before you leap:

  • If you use your SMSF to buy property, what sort of property should it be?
  • What do you do if you don’t have an SMSF?
  • Is it worthwhile setting up an SMSF to purchase property?

What is the advantage?

Essentially your super fund will be taxed at a lower rate and the capital gains tax may be discounted.

Residential vs. Commercial purchase in an SMSF

It’s important to note that you can’t buy a residential property if yourself or any family members intend to live in it. The sole purpose of the property purchase must be for supporting the MSF’s investment strategy in building wealth.

Commercial properties are the more common reason people use theirs SMSF’s lease back through their business. There a are a few specific conditions you need to be aware of if you’re considering this option though. Your properties terms of lease must be commercially competitive, there are no concessions for skipping payments or paying them late, the property must be subject to regular valuation, and the investment must satisfy the ‘sole purpose test’.

Final Questions…

Your decision on purchasing a property through your SMSF ultimately comes to a decision based on facts and advice. So be sure to ask yourself and other the right questions about your prospective investment:

  • Is the property a good investment
  • Will it appreciate?
  • What are the risks?
  • What is the yield?

You also have to be aware that a lot of time, dedication, and money goes into SMSF management and that it is highly advised to seek support and advice. Things like keeping time consuming day-to-day paperwork in check, arranging your annual audit and tax returns, and helping with general compliance needs can be overwhelming for the individual, while the penalties can be substantial if not done correctly. So contact your real estate agent on the best course of action to undertake this.

Give Hicks Real Estate a call today on 07 3355 6845 to find out more.



The material on the Web Site is presented as general information only. It is not intended as legal, financial or real estate advice and must not be relied on as such. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.

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