Using Your SMSF to Invest in Property: What You Need to Know

*The following information is general in nature and is not financial or legal advice. Please seek professional advice from a qualified SMSF adviser before making any decisions.

As a buyer’s agent specialising in investment properties, many of my clients are exploring different ways to grow their wealth through real estate. One question I often get is: “Can I buy property using my super?” The answer is yes—if you use a Self-Managed Super Fund (SMSF).

But before diving in, it’s important to understand how it works, the benefits, the risks, and the rules and regulations involved.

What is an SMSF (Self Managed Super Fund)?

Different to a ‘retail’ super fund where they have thousands and thousands of accounts and will invest your super for you according to their set investment strategies and your risk level. An SMSF is a private superannuation fund that you manage yourself. Unlike retail or industry super funds, an SMSF gives you greater control over how your retirement savings are invested—including the ability to invest in residential or commercial property.

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Why Use Your SMSF to Invest in Property?

There are a few key reasons why investors consider using their SMSF to purchase property:

✅ Tax Benefits

• Lower tax on rental income: Rental income is taxed at 15% (while the SMSF is in accumulation phase).

• Capital gains discount: If the property is held for more than 12 months, capital gains are taxed at 10%.

• Tax-free in retirement: Once in pension phase, rental income and capital gains may be tax-free.

  
  

✅ Diversification

Adding property to your super portfolio allows for diversification beyond shares and managed funds, helping to reduce investment risk.

✅ Borrowing Power

You can borrow to purchase property via a Limited Recourse Borrowing Arrangement (LRBA). This means the loan is secured only against the property—not your other SMSF assets.

✅ You Have Control

You have complete access to the money in the SMSF. You have access to your own SMSF bank account, you can transfer money, pay your super bills, and you make all of the investment decisions. Do I want to invest in shares, index funds, bonds, property? It's up to you to decide.

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How Much Do You Need in Your SMSF to Buy a Property?

There is no legal minimum required to purchase property in your SMSF. If you need finance to purchase the property, the minimum required in your super account will be lender specific with some setting no minimum and are happy, instead, if your super contributions and the rent can pay the loan. However, in practical terms, most lenders and advisers will recommend having anywhere from $120,000–$250,000 in super before considering an SMSF property purchase.

This is because:

• The upfront setup and ongoing admin costs of an SMSF are higher than a regular fund.

• You’ll need a 20% deposit if purchasing a residential property and a 30% deposit if purchasing a commercial property plus legal fees, stamp duty, loan setup fees, and potentially the cost of setting up a bare trust.

• Your SMSF must also retain sufficient liquidity (cash or other assets) to cover ongoing expenses like property management, rates, insurance, and potential loan repayments—even during vacancies.

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Who Should NOT Buy Property in an SMSF?

An SMSF property investment might not be right for everyone. You should probably reconsider this strategy if:

• You have a low super balance (under ~$150k), which makes diversification and compliance costly and risky.

• You need access to your super soon, such as nearing retirement without a long-term investment horizon.

• You want to live in or personally use the property, which is strictly prohibited.

• You’re not prepared for strict legal and administrative responsibilities, including audits and ATO reporting.

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Key Actions Required When Buying Property Through an SMSF

If you’re ready to move forward, here are the essential steps:

1. Seek Personalised Advice

Talk to a licensed financial adviser to assess whether buying property in your SMSF aligns with your long-term retirement goals and risk profile.

2. Set Up the SMSF

• Work with a specialist accountant or SMSF provider to establish the SMSF structure and trust deed.

• Register with the ATO and obtain a Tax File Number (TFN) and Australian Business Number (ABN).

  
  

3. Create an Investment Strategy

This is a legal requirement and must show how the property fits within the fund’s broader investment goals, diversification strategy, and liquidity needs.

4. Establish a Bare Trust (if Borrowing)

If you plan to take out a loan, a bare trust (also called a holding trust) must be set up to legally hold the property on behalf of the SMSF. It is a good idea to get this set up before you start looking for a property but make sure you check with your accountant and solicitor when the bare trust needs to be signed as this varies in each state it will be either on the day of the purchase or the day after.

5. Obtain SMSF-Approved Finance

Not all lenders offer SMSF loans, and terms are more restrictive than standard home loans. In fact, the big four banks don’t provide this type of finance so its recommended that you go through a broker with plenty of experience with SMSF finance. To obtain finance through your SMSF you’ll typically need:

• A larger deposit (20–30%)

• Higher interest rates

• A well-documented loan strategy

  
  

6. Source and Purchase the Property

This is where a buyer’s agent (like myself) becomes invaluable—helping you source suitable properties, perform due diligence, and negotiate terms that meet both SMSF rules and your long-term goals.

7. Maintain Ongoing Compliance

You’ll need to:

• Appoint an independent SMSF auditor each year

• Keep financial records and lodge annual tax returns

• Regularly review and update your investment strategy

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Top Tips / Things to consider

⭐The process of setting up the trust deeds, bank accounts, registering with the ATO, and rolling your funds over to the new SMSF setup can be cumbersome so allow 1 - 2 months to get this set up before starting your search for a property.

⭐Set up the bare trust (holding trust) before you start looking for a property. Make sure you check with your accountant and solicitor when the bare trust needs to be signed as this varies in each state. It will either be on the day of the purchase or the day after. It can be time consuming and costly to rectify if this isn't done correctly.

⭐The name of the purchaser on the contract of sale is VERY important. If you get this wrong you risk having to pay double stamp duty to have it corrected. So make sure you get the purchaser right the first time.

⭐The process of getting your finance approved takes longer than a normal property mortgage. Be prepared to sign 10 - 15 hard copy loan documents in the process of getting your finance approved (compared to around 5 that might need to signed online for a normal loan). You will need to sign these documents in person not online and they will need to be posted.

⭐Avoid quick settlements with this type of purchase and give yourself more time than you’d expect to make sure settlement goes smoothly. Check with your lender and solicitor for timeframes but usually anywhere from 30 - 60 days is required.

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Final Thoughts

Using an SMSF to invest in property can be a smart move for the right investor. It offers long-term tax benefits, greater control, and a way to build a tangible asset for retirement. But with that control comes responsibility—and you’ll need the right team of professionals to guide you through the process.

If you're considering this path, start with advice from a licensed SMSF adviser. And when you're ready to find the right property for your fund, I’d be happy to help you navigate the market with confidence.

Questions? Reach out for a free chat about the purchasing process in SMSF and who you need on your 'A' team!