Have you ever wondered if your superannuation could do more for you than just sit in a managed fund, at best, growing quietly in the background? For many Australians, property has proven to be the ultimate game-changer when it comes to building wealth—and with a Self-Managed Super Fund (SMSF), you finally have the vehicle to make it happen.

Property is one of the most stable and rewarding investments out there, offering both rental income and long-term capital growth. But here’s the catch: traditional super funds don’t allow you to directly invest in property. That’s where the Self Managed Super Fund steps in. With this, you can take control of your retirement savings and use them to invest in a residential or commercial property, all while enjoying significant tax advantages.*

With growing interest in using super to buy an investment property, more people are seeing the benefits of combining the security of real estate with the flexibility of an SMSF. It’s a powerful way to diversify your super investments and take charge of your financial future.

In this article, we’ll show you how it all works. We’ll explain the process of buying property in super through an SMSF, outline the benefits, and cover the important rules and considerations to keep in mind. If you’re ready to explore how property could transform your super, let’s dive in!

An SMSF is a type of superannuation fund in Australia that you manage yourself, giving you control over how your retirement savings are invested. Unlike traditional super funds, where investment decisions are made on your behalf, an SMSF allows you to tailor your investment strategy to suit your financial goals and preferences.

As of June 2024, there are over 625,000 SMSFs in Australia, collectively holding nearly $1 trillion in assets.** This significant figure highlights the growing trend of Australians taking charge of their super through SMSFs.

One of the key attractions of an SMSF is the ability to invest directly in property ($140 Billion in fact!**). Traditional super funds typically don't offer this option, but with an SMSF, you can include residential or commercial property in your investment portfolio. This flexibility allows you to diversify your assets and potentially enhance your retirement savings through property growth and rental income.

However, managing an SMSF comes with responsibilities. You're in charge of complying with superannuation laws, developing and following an investment strategy, and ensuring that all decisions are made in the best interest of your retirement benefits. It's a path that offers greater control but also requires a commitment to understanding and fulfilling these obligations.

Sounds tricky, right? It’s certainly a lot of paperwork, but with the right professionals in your corner, they can do all the heavy lifting for you, while you make the decisions.

As you can see, absolutely! You can use your SMSF to invest in property, and for many Australians, residential property is the preferred choice. It’s easy to see why—real estate has long been considered one of the most stable and accessible investments, and with the right strategy, it can significantly grow your retirement savings.

Residential property in particular offers the appeal of steady demand - Australia is deep into a housing shortage with no sure end in sight*** - and the potential for strong long-term capital growth. Many Aussies, just like you, are drawn to residential investments because they’re familiar and easier to understand than commercial property, which can involve higher vacancy risks and specialised market knowledge.

The rules for buying residential property through your SMSF are clear but strict. The property must:

For those looking to buy residential property, it’s also worth exploring the option of borrowing through your SMSF using a Limited Recourse Borrowing Arrangement (LRBA). This allows the fund to purchase property even if it doesn’t have the full amount upfront, though it’s important to ensure the loan and purchase remain compliant with superannuation laws.

With this option, can leverage your current super, to get an even stronger return. Instead of earning, as an example, 7% on what you currently have in super, you can earn 7% on that AND what you borrow. We’ve got more information on how that works here.

Residential property investments through an SMSF come with tax advantages too. Rental income is taxed at a flat 15%, significantly lower than personal income tax rates, and capital gains tax can be reduced to 10% if the property is held for more than a year. If the property is retained until the retirement phase, it can even become entirely tax-free.*

By focusing on residential property, SMSF trustees can take advantage of a straightforward, familiar investment with strong growth potential, while enjoying the unique benefits of investing within super.

Buying property through a Self Managed Super Fund might sound complex, but when you break it down, it’s a straightforward process—so long as you follow the rules and get the right advice along the way. Here’s how it works:

Final Tip:
​This process involves a lot of rules and paperwork, but the rewards can be significant when done right. Make it easy with a team of professionals who understand SMSFs and property investment to ensure everything is compliant and aligned with your goals.

Using your super to buy property can be a smart move, especially given the current state of the housing market in Australia. Here’s why it’s worth considering:

The Bigger Picture
Investing in property through your super doesn’t just benefit you—it helps tackle the housing crisis, too. Every new rental property added to the market makes a difference, especially when supply is so tight and demand is so high.