A Guide To Buying Property Through A SMSF

Looking to invest but don’t quite have the funds?

You’ve come to the right place!

Put simply, self-managed superfunds (SMSFs) are another method of saving for your retirement. The key selling point being that the members (up to four people) of the fund are also the trustees, meaning they will have much more control over their super and can leverage the money to invest in residential property.

How Does It Work?

SMSFs allow individuals and couples to combine their super balances and invest in property through one fund. Having transferred the funds into a SMSF account, the funds can then be used as a deposit towards a property purchase. Various lenders will provide up to 80% of the funding for the purchase of the SMSF, and there are mortgage brokers that specialise in SMSF loans.

What Are The Benefits?

The benefits of a SMSF include but are not limited to:

Borrow to invest in property:

With the rules that allow SMSFs to borrow, SMSF members can invest in residential or commercial properties that would otherwise be outside of their reach, allowing investors to enjoy significant returns over the long-term. A fund is generally allowed to borrow between 65% to 80% of the value of the property. Of course, there are rules which govern this activity, due to the nature of the legal structures.

Tax minimisation:

Apart from defined benefit super funds (like a government employee fund), most other superannuation funds will offer the ability to take a tax-free pension as an income stream upon retirement. This provides trustees the ability to use the unique flexibility of an SMSF to minimise the amount of overall tax that the SMSF members pay within the fund, by taking their unique situation into consideration and making strategic decisions on contributions, reserves and distributions.

Reduced transaction costs:

When it comes time to transition towards the pension/retirement phase, a SMSF will enable a seamless experience from the accumulation phase to the pension phase without the need to sell down assets, therefore not triggering capital gains tax (CGT) and other transaction costs. You will simply retain your investments and begin to draw down on your SMSF balance as an income.

Is It A Popular Option?

Borrowing by SMSFs to buy residential and commercial properties jumped by about 22 per cent in 2021 to almost $66 billion as investors plunged into soaring property markets, according to analysis by the Australian Taxation Office. The value of property in SMSFs also rose by about 22 per cent to a record $140 billion, thanks to rising prices and new investments.

An attractive feature of the fund is that it will pay 15 per cent tax on the rental income from the property, and if the property is held for longer than 12 months, investors receive one-third of a discount on any capital gain made on the sale, which reduces CGT liability to 10 per cent.

Any interest payments on a loan for buying a property are also tax deductible to the super fund. Expenses exceeding income create a taxable loss that is carried forward each year and can be offset on future taxable income. But losses cannot be offset against personal income outside the fund.

As a result of this, many people assume that any personal savings contributed to the purchase can be withdrawn from the fund at will, however this is not the case. It will count as a contribution and cannot be withdrawn until investors meet the preservation age, which is the earliest age one can access their super – a huge bonus for investors looking for financial freedom!

So is SMSF property investment worth it? While this is quite a popular form of investment, the process itself can also be quite overwhelming and there are some considerations you should be aware of.

By partnering with AllianceCorp, we will provide full support by liaising with a range of financial planners and SMSF administration specialists to assist you with the creation and ongoing management of the fund.

To discuss this potential avenue further, simply click the button below to book a FREE strategy session with one of our Senior Property Wealth Planners and unlock your investment potential with a self-managed superfund.



  • This field is for validation purposes and should be left unchanged.


Email Subscription

  • This field is for validation purposes and should be left unchanged.