Buying Property in an SMSF – A Smart Investment
Investing in property through an SMSF offers tax benefits and greater control, but understanding the rules, costs, and risks is crucial.
Benefits of Buying Property in an SMSF
✅ Tax Advantages – Rental income is taxed at 15%, and capital gains may be reduced to 10% if the property is held for over a year. Learn more at Revenue NSW.
🏡 Control Over Investments – An SMSF allows you to directly manage your investment choices and align them with your retirement goals.
📈 Potential Growth – Property can provide long-term capital appreciation and rental income, contributing to your retirement wealth.
Key SMSF Rules & Considerations
🔹 Sole Purpose Test
📌 SMSF properties must solely provide retirement benefits to fund members. They cannot:
- Be purchased from a related party
- Be lived in or rented by fund members or their relatives
👉 Read the full rules on MoneySmart
🔹 Borrowing Restrictions
💰 SMSFs can borrow to purchase property under a Limited Recourse Borrowing Arrangement (LRBA), but:
- Borrowed funds cannot be used for renovations.
- Improvements must be funded from existing SMSF resources.
👉 More on SMSF borrowing – CPA Australia
🔹 Diversification Risks
📉 SMSFs should avoid investing too much in a single property, as this increases financial risk. Diversification helps:
- Balance returns
- Reduce risk exposure
- Improve long-term fund stability
What Does It Cost to Invest in Property Through an SMSF?
Upfront Costs
Stamp Duty – A tax on property purchases.
Legal Fees – Costs for conveyancing and contracts.
Advisory Fees – Financial and SMSF setup advice.
Ongoing Expenses
Property Management – Fees for leasing and maintenance.
Maintenance Costs – Repairs and upkeep expenses.
Insurance – Landlord and building insurance.
Compliance Costs
SMSF Audits – Required annual compliance checks.
Admin Fees – Fund management and reporting costs.
Ongoing Reporting – Regulatory obligations to remain compliant.
Our SMSF Property Services
Expert Property Search
We identify SMSF-compliant investment properties.
Access to on-market and off-market opportunities.
Tailored searches to match your financial goals.
Due Diligence & Compliance
We assess property suitability for SMSF investment.
Conduct rental yield and growth analysis.
Ensure compliance with ATO and SMSF regulations.
Negotiation & Acquisition
- We negotiate the best price on your behalf.
- Handle contract reviews and settlement coordination.
- Ensure a smooth transaction process from start to finish.
FAQ's About SMSF Property Investment
📌 A Self-Managed Super Fund (SMSF) allows individuals to control their superannuation investments, including property. It must comply with ATO regulations and be managed solely for retirement benefits.
❌ No. SMSF-owned properties cannot be used by fund members or their relatives for personal purposes. The property must be solely for investment to provide retirement benefits.
📌 Most lenders require an SMSF loan deposit of 20-30% of the property’s value. However, borrowing is subject to Limited Recourse Borrowing Arrangement (LRBA) restrictions.
⚠️ Only minor repairs & maintenance are allowed.
- Borrowed funds cannot be used for major renovations or improvements.
- Any upgrades must be funded from existing SMSF resources.
✅ Key tax advantages:
- Rental income is taxed at 15% during the accumulation phase.
- Capital gains tax is only 10% if held for over 12 months.
- If the fund enters pension phase, rental income and capital gains may become tax-free.
💰 Yes, but only through an LRBA.
- The loan is secured only against the purchased property.
- Higher interest rates and stricter lending rules apply.
