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Buying Property in a Self-Managed Super Fund

We often get asked about the benefits and risks of buying property in a Self Managed Super fund. And it appears this strategy is back in vogue with property prices falling as these phone calls are on the rise.


So let’s take a look at some of the benefits and risks of investing in property via your super fund:

The positives:

Growth assets pay you an income (rent) and have the potential to grow over time (increase in capital). Property is a growth asset and can provide diversification if you already own shares or managed funds.

A popular strategy if you own and operate a business is to purchase commercial premises and lease this to your business. The benefit being that you know your tenant (you!) and your rent is paying off an asset that you will own for your retirement.

Residential property is also an option in super and can provide those wonderful growth asset characteristics that people seek to build wealth. As many of us are familiar with property (we all live in property) it’s an asset class which most of us know and understand to some degree. In certain regions residential property provides high growth and consistent rent which makes it very attractive. Obviously you need to research your property just as you would any investment to ensure your purchase meets your needs and goals.

Superannuation itself provides some major benefits, the most popular being the concessional tax treatment. As property is an asset most people hold for long periods of time, these tax concessions can be significant in retirement.

The Negatives:

Regulations – Self Managed super funds have very strict rules and regulations which must be adhered to. The regulations are complex and we would suggest you seek advice on all property considerations to ensure your property meets all the rules.

Related Parties – some properties are unable to be utilised by you or anyone related to you. There are exceptions to this rule but again you must seek advice to ensure you are complying with the rules.

Commercial property – this must be used “wholly and exclusively” for a business. It doesn’t have to be your business but it must be used entirely for business purposes.

Borrowing – you are able to borrow inside a Self Managed Super Fund but again there are strict rules. As a starting point most lenders will only lend up to 60-70% LVR. You must have regular contributions being made to your fund. This is an incredibly complex area and you will need professional advice.

Diversification – everyone thinks they are a property expert. However some properties do not go up in value and can have endless expenses or issues with tenants. If you choose to invest in multiple properties make sure they are diversified from each other to minimise this risk further.

Costs – Property is an expensive asset class- stamp duty, legal fees, rates and levies, maintenance and agents fees as well as possible gaps between tenants. Ensure you have a buffer and run the numbers to ensure your property is a good investment. If you are near retirement there are other considerations to meet minimum pension requirements so once again, seek advice.

Scams – if it sounds too good to be true, it often is. Be aware of developers with “amazing” offers and add-ons. Also be mindful of issues that can go wrong when considering buying off the plan.

Conclusion: Bricks and Mortar can be a great long term investment in a considered financial plan. Self Managed Super Funds are very complex and large penalties can apply for errors, for this reason we strongly recommend you seek advice from an SMSF expert.

The ATO also has some great information at

This information contained in this document has been provided as general advice only. The contents of this document have been prepared without taking account of your personal objectives, financial situation or needs. You should, before making any decision regarding any information, strategies or products mentioned in this document, consult with your GPS Wealth Ltd financial adviser to consider whether it is appropriate having regard to your own objectives, financial situation and needs


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