Close this search box.
BIS Cosgrove Accountants Gold Coast & Brisbane

Can you use your Self Managed Super Fund to invest in property?

Yes! You absolutely can use a Self Managed Super Fund to buy property, however, there are conditions.

You must keep in mind that your Self Managed Super Fund is intended for your retirement. This means that any investments you make must align with your fund’s investment strategy.

What sort of property can you buy with a Self Managed Super Fund?

It is possible to invest in both residential and commercial property with different rules applying to both types of property.

Investing in residential property with your Self Managed Super Fund:

To buy residential property:

  • Your SMSF cannot purchase the property from someone related to you,
  • You are not allowed to live in the property yourself,
  • You are not able to rent the property to yourself or someone related to you

Investing in commercial property with your Self Managed Super Fund:

To buy commercial property:

  • The property must be used exclusively for business purposes
  • The property must be purchased at market value

This is great news for business owners as it means you may be able to purchase a place of business and then pay market-value rent for the property in accordance with an arms-length documented lease.  Keep in mind that the rules are very stringent if not adhered to, may cause you to fail the test for non-business use of the property so it is extremely important to consult with your Financial Planner before proceeding.

What are the advantages of buying property with your Self Managed Super Fund?

One of the key benefits is that capital gains on the property can be concessionally taxed at a rate of 10% in the future and potentially even tax free. Despite these capital gains benefits, it is important to talk with your Financial Planner and consider the costs.

Can you borrow money with your Self Managed Super Fund to buy property?

A a SMSF can enter into a “Limited Recourse Borrowing Arrangement (LRBA) which is a finance agreement that limits the security provided to the lender to the asset the loan relates to. This means the lender does not have access to any other assets in your Self Managed Super Fund.

Can you use a Self Managed Super Fund for property development?

No. The Superannuation regulations do not allow borrowed funds to be used for the development of property. The reason for this is that the development of property would be considered the replacement of an asset. These regulations also mean that upgrades and renovations can be a touchy subject as improvements can change the character of an asset and as a result, it is paramount that you contact an Self Managed Super Fund expert for advice.

Contact one of our Gold Coast accountants or Financial Planners to talk about how you can best invest in property through your Self Managed Super Fund. Call (07) 5598 3800 today!

Want to know more? You can hear about all things SMSF from the newest sector of our firm: BIS Super