1. We Can Help You
Investing in property through a Self-Managed Super Fund (SMSF) is an increasingly popular way to grow retirement wealth. But there are strict rules that govern what your SMSF can and can’t do - especially when it comes to property.
If your SMSF purchases a residential property, it cannot be lived in or rented by you, other trustees, or anyone related to the fund—even distant family. It’s also not allowed to buy a residential property you already own, either by purchase or contribution. So, no holiday homes or renting to family members through your fund.
As a trustee, you’re responsible for ensuring your fund remains compliant. That means understanding your obligations - even if you hire professionals to assist. Mistakes can lead to penalties, stamp duty issues, or tax problems, so it’s vital to get the setup right from the beginning. For example, your SMSF must purchase the property in the correct legal name, typically that of the bare trust trustee—a step often overlooked that can have costly consequences.
2. Borrowing Through Your SMSF
One of the more powerful tools available to SMSF investors is the ability to borrow money to buy property, using a structure called a Limited Recourse Borrowing Arrangement (LRBA). In this setup, the property is held in a separate trust, and only that asset can be claimed by the lender if repayments aren’t made—protecting the rest of the SMSF’s assets.
However, borrowing through an SMSF is more complex and costly than a typical home loan. Lending criteria are stricter, not all banks offer SMSF loans, and interest rates and fees are usually higher. That’s why it’s crucial to speak with a mortgage broker or bank before setting up your SMSF - especially if property is your primary reason for doing so.
All loan repayments must come from the SMSF itself, usually through rental income and super contributions. Your fund must maintain enough liquidity to keep up with repayments over time.
There’s also a rule around “single acquirable assets”—which means that if a property spans multiple titles or includes separate assets (like furniture or multiple blocks), multiple LRBAs may be required. This can significantly impact the cost and complexity of your investment, so getting the structure right at the start is essential.
