SMSFs and Property
SMSFs and Property
If you've ever wondered whether you can use your self managed super fund (SMSF) to buy property—you're not alone. It’s a hot topic for Aussies wanting to take control of their retirement nest egg.
But like most things involving super and property, there are rules, costs, and a bit of red tape. In this guide, we’ll break it all down simply—no jargon, no fluff—just the info you need to know.
Self-managed super fund property rules
Before you go house hunting with your SMSF, there are some strict rules you need to follow. The Australian Taxation Office (ATO) keeps a close eye on this stuff, and breaking the rules can mean heavy penalties.
Here’s what your SMSF can and can’t do when it comes to property:
✅ The property must pass the sole purpose test — that means it’s there purely to benefit your retirement.
❌ You can’t buy from a family member or related party.
❌ You (or your relatives) can’t live in the property.
❌ You can’t rent it out to family or friends.
💡 BUT if your SMSF buys a commercial property, you can lease it to your own business—as long as you pay market rent and follow the rules.
What an SMSF property can cost you
Owning property through your SMSF isn’t cheap—and the fees can sneak up on you. Here are the main costs to keep in mind:
Upfront fees (legal, setup, advice)
Stamp duty
Property maintenance and management
Insurance and council rates
Loan interest and bank fees
Commission fees (watch out for these if you're buying off-the-plan)
Also, be cautious of “bundled” services from groups who refer each other. It can lead to biased advice that’s more about their profits than your retirement.
📈 Tip: Only take advice from someone with an Australian Financial Services (AFS) licence. You can check this on ASIC Connect.
SMSF borrowing to purchase property
Thinking about borrowing through your SMSF? It’s possible—but comes with strict conditions and added risks.
This kind of borrowing is called a Limited Recourse Borrowing Arrangement (LRBA). It means your SMSF can borrow to buy a single asset—like a house or unit.
Things to know before borrowing:
📈 Loan costs are higher than standard property loans.
💸 Your SMSF must always have enough cash flow to cover:
Loan repayments
Insurance
Property expenses
Member pension payments (if applicable)
❌ You can't offset property losses against your personal income.
📅 You can’t make big changes to the property (like renovations) until the loan is fully paid off.
❌ If set up incorrectly, these arrangements are very hard to unwind—and may force your SMSF to sell at a loss.
Property developers and SMSFs
Some property developers promote SMSFs as a way to sell properties. But here’s the catch—they often have conflicts of interest.
They might:
Push overpriced properties
Receive referral fees from financial “advisers” they recommend
Use flashy sales tactics (free flights, fancy dinners)
⚠️ Warning: If a developer is giving financial advice, they legally need an AFS licence. Always ask questions and do your own research.
Up next in Property Investment
Property schemes
Be cautious of "too good to be true" schemes promising huge returns via SMSFs. If you’re ever pressured to act fast or invest in unfamiliar areas, hit pause and get independent advice.
Timeshares
Timeshare properties are a definite no-go for SMSFs. They don’t pass the sole purpose test and usually don’t stack up financially either.
Can a self managed super fund lend money?
Your SMSF can lend money, but only under very specific conditions. It can’t lend to members or relatives, and any loan must follow arm’s length rules (as if dealing with a stranger). It’s rare, and risky—most funds avoid it.
Can a self managed super fund buy a car?
Nope. A self managed super fund can’t buy a car unless it’s a collectible (like a classic car), and even then, it can’t be driven or accessed by members. So for all practical purposes—don’t go car shopping with your SMSF.
Can a self managed super fund buy a business?
Yes—but only if the business is structured as a commercial property or investment that meets SMSF rules. Your fund can’t run an active business. Owning the property the business operates from? That’s usually fine. Running a café out of your SMSF? Not so much.
Can a self managed super fund borrow money?
Yes—through a Limited Recourse Borrowing Arrangement (LRBA), as covered earlier. It’s legal, but complicated. Always get professional advice before borrowing through your SMSF.
FAQs about Self Managed Super Funds
Q: Can I live in an SMSF property after I retire?
A: Only after you legally retire and the property is transferred out of the SMSF (which may trigger tax implications). You can't live in it while it’s still held by the SMSF.
Q: How much do I need in my SMSF to buy property?
A: A general rule of thumb is at least $200,000 in your SMSF—but more may be needed if borrowing is involved.
Q: Can I buy land and build using my SMSF?
A: No, not with borrowed funds. LRBAs only allow for purchasing a single asset. Building adds complexity that’s usually not allowed under SMSF borrowing rules.
FAQs about FINSAP
Q: Does FINSAP help set up SMSFs?
A: Yes—we guide you through the setup process, ensure compliance, and help you choose the right property investment strategy.
Q: Can FINSAP help with SMSF property loans?
A: Absolutely. We specialise in SMSF lending and can connect you with trusted lenders who understand the rules.
Q: I’ve been pitched an SMSF property scheme. Can FINSAP give a second opinion?
A: 100%. We’ll give you an honest, independent review—no sales pitch, just straight talk.
Need help with your SMSF property strategy?
At FINSAP, we simplify the complex world of SMSFs and property. Whether you're just starting out or already own a fund, we can help you make smarter, compliant property investments for your retirement.
📞 Contact us today to book a consultation or learn more about our SMSF property strategy services.
