Since 2010, we have seen a gradual increase in Self-Managed Super Fund property investment. Whilst there are many benefits to this like tax minimisation, discounted gains tax etc, it is not all black and white and there can be an increased risk of complications and delays attached to this type of transaction. 

Before we deep dive into the potential complications of this transaction, let’s look at a few rules and limitations of buying a property with your SMSF to understand the transaction landscape better.




Can you buy property with a self managed super fund?

A self managed super fund (SMSF) cannot borrow money in their own right, however this can be achieved through the setup of a Bare/Custodian Trust Account to hold the property and undertake the borrowing on behalf of the SMSF.

The sole purpose of this investment strategy should be to provide a retirement benefit to the fund members and should not exist as a residential property.

SMSF property rules

If the self-managed super fund property is being purchased with cash with no borrowing involved, the entire process is easier as the cash is likely in an account and ready to be drawn upon. But if the self-managed super fund property requires borrowed funds to purchase the property then the transaction is a little more complicated. 

The complexity comes about because the lender is required to go through a much more onerous process of documentation and legal checks where an SMSF is involved and when there are delays in the roll-over of funds out of the existing super fund. For this type of transaction, attention to detail is a must. This is why you should  get in touch with a conveyancer.


Can I rent a property owned by my SMSF?

Property purchased on behalf of your SMSF cannot be rented to anyone related to the fund members.  

If it is a commercial property, then the lease terms should be competitive to satisfy the Australian Taxation Office.


Timeline of purchasing a self-managed super fund property

In our experience, the lender usually needs up to four weeks to provide finance approval and then an additional three to four weeks to arrange settlement following that approval. 

This is not always palatable for the vendor, but it is a more realistic timeline than the regular 30-45 days that most vendors and real estate agents work within. 

We believe that having a realistic date upfront is better than having issues with negotiating addendums for the change of dates if those dates can’t be met.


Want to know more about purchasing a self-managed super fund property?

At Eckermanns, our day-to-day life revolves around attention to detail. Whether it is a simple transaction or a complicated one, we have the necessary experience and knowledge to handle it. We work toward making every transaction stress free for our clients and that includes SMSF transactions. We also have the additional benefit of the support of Eckermann Lawyers where that assistance is required. We have you covered!

So, whatever your property plans may be – whether you’re looking to kick off this weekend or well into the future, we’re here for you and it’s never too early to talk to us.


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