Self-Managed Superannuation Funds (SMSFs) offer a unique opportunity to invest in property and potentially boost your retirement savings. However, it's essential to understand the rules, regulations and implications of setting up an SMSF as they are more complex than a standard super fund.
If you set up an SMSF, you're in control. This means you'll make the investment decisions and are responsible for ensuring compliance with superannuation and tax laws. This could potentially require a sizeable investment of knowledge and effort.
Read our guide to setting up a super fund for property investment to understand some of the important considerations.
Before diving into property investment through your SMSF, consider these key factors:
There are also rules you must follow when you purchase property in your SMSF.
You can purchase property through your SMSF only if specific rules are followed. The property must:
Let’s now look at the steps you need to take before you apply for a loan.
You can now get in touch with us at Yard to explore SMSF loan options.
Our team of experts can guide you through the application process for an SMSF loan, so you secure the necessary funds for your property purchase. It's a simple, three step online application you can complete anytime.
Once approved, Yard will handle the settlement process to ensure a smooth and efficient property transaction.
Yes, you can buy an investment property with your super, but it must be done through a Self-Managed Super Fund (SMSF). The rules include:
The amount of money you need in your SMSF to purchase property varies, but experts generally recommend a balance of at least $200,000–$250,000 to make property investment viable. This is because you need sufficient funds to cover the purchase price, transaction costs (e.g., stamp duty, legal fees), and ongoing expenses like property maintenance and SMSF management. Additionally, if your SMSF borrows to buy property through a limited recourse borrowing arrangement (LRBA), you must also account for loan-related costs.
No, you cannot live in a residential property purchased through your SMSF. Under Australian superannuation laws, SMSF property investments must meet the "sole purpose test", which ensures assets are held solely to provide retirement benefits to fund members. Living in the property, or allowing a related party to live in it, breaches these rules. Even renting the property to related parties is not allowed. These restrictions apply to residential properties. You can live in the property once you retire, or reach preservation age (55 to 60 years old). This is when you can legally access your super fund and transfer the title of the property into your name. Different rules apply to commercial property within your SMSF - you can rent a commercial property to a related party which could be your own business.
Yes, you pay stamp duty on a property purchase through an SMSF. Just like any other property purchase, stamp duty is a government tax levied on the transfer of property ownership. This applies even if the property is purchased through an SMSF. Use our stamp duty calculator to estimate your stamp duty fee based on the purchase price of your investment property.
No. While SMSFs can be used to invest in property, there are strict rules in place to prevent self-dealing. This means you cannot buy a property from yourself or a related party. The property must be purchased at market value and used solely for the purpose of generating income for the fund.
However, you can use your SMSF to purchase an investment property that you can rent out to generate income. This income can then be used to pay off the loan and potentially grow your superannuation savings.
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