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Guide to Self-Managed Super Funds

Self-managed superfunds offer Australians the unique opportunity to privately run their superfunds. With traditional superfunds, super is managed by specific organisations and trusts whereas SMSFs puts that responsibility onto the individual.  

But why self-manage? SMSFs offer a wider range of investment options and lets you invest your super into property to increase your funds for retirement. This is a common SMSF strategy as property tends to provide a reliable return. For individuals, it offers a material way to manage superfunds whilst gaining other benefits like equity as well.  

If you’ve opted for a SMSF, we’ve compiled all you need to know about SMSFs and property investment. Discover everything from securing the purchase to the steps you need to take to guarantee your new home can efficiently manage funds.  

What is a SMSF property 

A SMSF property is either a residential or commercial property that is funded by your super. However, this property cannot be lived in by you or any relation at any time. The property is built purely as an investment property.

If you buy a property through an SMSF, the fund is required to pay 15% tax on rental income from the property. On properties held for longer than 12 months, the fund receives a discount on any capital gain it makes from the sale. Learn more about SMSFs and property with the help of resources like MoneySmart.

Why buy a SMSF property 

Despite their complexity, there are several benefits to owning property through a SMSF that make it a popular option.  

#1 Tax advantages  

SMSFs enjoy a number of tax advantages, such as tax-free investment earnings and capital gains tax discounts. This can mean that your property investment grows faster, and you keep more of your profits. 

#2 Independence 

You have full control over the fund’s investment strategy and investment choices, including the type of property you buy and how you manage it. This gives you the flexibility to tailor your investment to your individual needs and goals. 

#3 Borrowing power  

SMSFs can borrow money to purchase property, which can help you to grow your investment portfolio more quickly. 

#4 Estate planning 

SMSFs can be used to pass on your assets to your loved ones in a tax-efficient way. Once again, it’s best to consult a financial planner if you intend to set up a SMSF property for the purpose of inheritance. 

How to buy investment property with SMSF  

Whilst buying investment property with a SMSF can be a great way to build wealth for retirement, it’s important to understand the rules and risks involved before you get started. 

Here’s a general guide on how to buy investment property with SMSF in Australia: 

  1. Set up an SMSF. If you don’t already have an SMSF, you’ll need to set one up. This can be a complex process, so it’s important to seek professional advice from an accountant or financial adviser. 
  1. Find the right property. When choosing an investment property for your SMSF, it’s important to consider the fund’s overall investment strategy. You should also consider the property’s location, potential rental income, and capital growth potential. Read our guide to building a profitable investment property now. 
  1. Get pre-approved for a loan. Most SMSF lenders require borrowers to be pre-approved for a loan before they can purchase a property.  
  1. Establish a limited recourse borrowing arrangement (LRBA). An LRBA is a special type of loan that allows SMSFs to borrow money to purchase property. The professional advice from an accountant or financial adviser will help you navigate this part of the process. 
  1. Start building. Once you’ve secured financing, you can purchase your land plot and we can start construction. With SMSFs, the property is held in a separate trust structure until the loan is repaid. 
  1. Manage your investment property. Once you’ve purchased the property, you need to manage it effectively to make sure it’s a quality investment. 


Can I use my super to buy a house? 

Yes, you can use your super to buy a house in Australia through a self-managed super fund (SMSF), but you can only buy an investment property, not a home to live in. 

To buy investment property through your SMSF, you will need to establish a limited recourse borrowing arrangement (LRBA). An LRBA is a special type of loan that allows SMSFs to borrow money to purchase property. However, there are strict rules around LRBAs, so it’s important to seek professional advice from an accountant or financial adviser. 

What happens when self-managed super fund property when you reach preservation age? 

When you reach preservation age, you have a few options as to how you handle your SMSF property. You can: 

  1. Continue to hold the property in your SMSF. This is the simplest option, and it allows you to continue to earn rental income from the property and benefit from any capital growth. 
  1. Sell the property and transfer the proceeds to your SMSF. This will allow you to invest in other assets, such as shares or bonds. 
  1. Transfer the property to yourself personally. This is known as an in-specie transfer. To do this, you must have reached preservation age and retired. You must also have met the sole purpose test, which means that the property was only used to provide retirement benefits to fund members. 

Build your SMSF property 

If a SMSF property feels like the right option for you, reach out to our friendly G.J. Gardner Homes family today. With decades of building experience, we understand how to build to maximise he return on your property investment. Get in touch today.