Thinking about using a self-managed super fund (SMSF) to invest in property? You’re not alone. From high-earning professionals to self-employed entrepreneurs, Aussies see SMSF property as a way to diversify their portfolios, grow retirement wealth, and take more control over their finances.
However, buying property through an SMSF isn’t straightforward.
While it can offer tax perks and capital growth, you’ll also face strict regulations, higher upfront costs, and extra admin.
In this guide, we’ll walk you through:
Can you buy a property with super? What’s allowed and not?
Pros & cons of using super for property.
How much super do you need to get started?
Step-by-step tips for buying property through an SMSF.
Can you live in an SMSF investment property?
SMSF home loan options and lender requirements
Recent changes to SMSF property investment policies
Common SMSF property investment mistakes to avoid
Whether you’re planning for retirement, aiming to invest your super wisely, or simply curious about the process, we’ll help you get the facts to make a confident decision.
Can you buy a property with your super?
Yes, but under strict rules. The Australian Taxation Office (ATO) wants to ensure your super stays focused on retirement savings, so here’s what’s allowed and not.
What's allowed | What's not allowed |
|---|---|
Residential & commercial investment properties the SMSF owns for genuine investment purposes, so you can’t live there. | Living in the property or renting it to family members. SMSF investments must remain purely for retirement benefits. |
Limited Recourse Borrowing Arrangements (LRBA). If you default, your lender only claims the property, protecting your other SMSF assets. | Major property developments with borrowed super funds. You must use existing SMSF money (not borrowed) to renovate or develop. |
Leasing commercial property to your business provided the rent is at market rates. | Buying property outside your SMSF structure The SMSF must legally own it to meet the ATO’s “sole purpose” test. |
Pros and cons of buying a property with super
Pros | Cons |
|---|---|
Rental income in an SMSF is taxed at 15%, and if you hold the property for more than 12 months, capital gains tax can drop to 10%. | You’ll often need a 30–40% deposit, which is bigger than most standard home loans. |
You call the shots. You can choose and manage the investment property directly rather than relying on traditional super funds. | Expect annual audits and compliance checks to confirm your property truly serves the SMSF’s retirement purpose. |
If your property is in a good location, it could appreciate over time, boosting your retirement nest egg. | You’ll face legal fees, trust structures, annual audits, and other ongoing expenses. |
SMSF property can be a powerful way to grow your retirement savings, but it's important to do your homework and stay compliant with ATO rules. A solid investment plan can make all the difference.
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How much super do you need?
Regulators set no official minimum balance, but many experts recommend at least $200,000 to $300,000 in super before investing. Why so high? Because you'll have to handle:
Deposit requirements: 30–40% is typical for SMSF loans.
Legal and admin costs: Setting up a trust, audits, and ongoing SMSF management.
Liquidity needs: Covering loan repayments, repairs, insurance, and surprises.
Lender restrictions: Banks often require extra conditions to keep your SMSF solvent.
For example, if you're eyeing an $800,000 investment property, you might need:
$240,000–$320,000 (deposit)
$10,000–$20,000 (legal and compliance costs)
$80,000 (liquidity buffer)
Total: $330,000–$420,000 in super
A strong super balance makes SMSF property ownership more sustainable. You also want to ensure your fund isn't putting all its eggs in one basket; diversification is key.
A step-by-step guide to buying a property with super
1. Set up your SMSF.
Register with the ATO and create an investment strategy that follows super regulations.
2. Secure an SMSF Loan (If borrowing).
Compare different SMSF lenders. Not all major banks offer SMSF loans, and policies vary. You can also establish a LRBA to limit the lender's recourse to the property.
3. Use a Bare Trust.
SMSFs can't directly own mortgaged property. Instead, a bare (holding) trust holds the title until you pay off the loan, making the bare trustee the legal owner.
However, the SMSF benefits from rental income and growth.
4. Manage compliance and rent collection.
Charge market rent if you're leasing the property, even if it's for your own business. To protect your fund and stay compliant, keep up with annual audits and follow ATO and APRA guidelines.
Can you live in an SMSF investment property?
Unfortunately, no. Your super is there for retirement. ATO's sole purpose test states that the property exists to build your retirement savings, not to support your current lifestyle.
So, any property you hold in an SMSF must be a genuine investment asset. That means you can't use it as your home or rent it to your family.
However, there's an exception: a commercial property.
If you run a local store, office, or warehouse, you can buy those premises through your SMSF and lease them back to your business—as long as the rent is set at market rates. It's a handy way to keep an asset in your fund while serving your day-to-day operations.
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SMSF home loan options and lender requirements
Securing a loan through your SMSF can feel like a major hurdle. Not all lenders offer SMSF loans and those that do often have tougher eligibility rules.
Fewer choices: Major banks have mostly pulled out of the SMSF loan market, so you may need to look at smaller or specialised lenders.
Higher interest rates: SMSFs are considered higher risk, pushing rates 1–2% above what you'd pay on a standard owner-occupier or investor loan.
Strong serviceability: Lenders want proof your fund can handle loan repayments, even if rental income dips.
LRBA structures: You'll need a LRBA, so if something goes wrong, the lender can only claim the property itself, not your entire superfund.
Need guidance? An Aussie broker can help you compare various SMSF loan products and navigate each lender's unique policies.
Recent changes to SMSF property investment rules
Recent APRA and ATO guidelines updates have made SMSF property lending a bit more challenging. Here's a quick snapshot:
Higher LVR requirements: You'll probably need a bigger deposit because lenders have tightened their lending limits.
More compliance checks: Rental income and loan serviceability are under the microscope. Be ready to show stable tenancy and a solid repayment plan.
Increased audits: If your SMSF has heavy property exposure, APRA and ATO may want a closer look.
Non-Arm's Length Income (NALI): The ATO is cracking down on any SMSF deals that don't reflect a true market relationship (for example, renting to relatives below market rates).
So, what's the impact?
Larger deposit: Count on putting more super towards the purchase.
Documentation: Keep thorough records—rental agreements, property expenses, and anything else that proves compliance.
Common SMSF property investment mistakes to avoid
Overleveraging
Borrowing too much can strain your SMSF. SMSF loans often have higher rates and stricter terms, so aim for a conservative LVR.
Failing to meet ATO compliance
Letting family move in? Setting the rent too low? These are big no-nos. Break the rules, and you could face hefty penalties or forced asset sales.
Neglecting SMSF liquidity
If your SMSF lacks liquidity, you may be forced to sell at the wrong time. Build a financial buffer to stay flexible for expenses, loan repayments, and unforeseen challenges.
How Aussie can help
Buying property with your super doesn't have to be daunting, especially if you've got the right support. At Aussie, we pride ourselves on our friendly, tailored approach, guiding you through:
Comparing SMSF loans: We look at interest rates, deposit requirements, and specialised lender options.
Staying compliant: We work with trusted contacts who can advise you on ATO regulations, so you keep your SMSF on track.
Ongoing support: From your first chat to property settlement (and beyond), we're here to make your journey easy and responsive at every step.
Let your SMSF property work for your future
A successful SMSF property purchase isn't just about snapping a bargain or finding that perfect location. It's about staying compliant, borrowing wisely, and keeping enough spare cash in the fund for life's unexpected turns.
With clear-eyed planning and the right support, the property can be a steady ally in your journey toward a more secure retirement.