Buying Investment Property in Your (SMSF) Self-Managed Superannuation Fund


Have you thought about buying an investment property in your self-managed superannuation fund (“SMSF”) but thought it was too hard or you had to finance the whole property? Well not anymore.

Recent legislative changes mean that SMSF’s are now more easily able to buy property directly through their funds. In 2007, the Superannuation Act was amended so SMSF’s could borrow to purchase property. Historically, only SMSF’s with high account balances invested in property as the property needed to be bought outright. These new laws significantly broaden the scope for investors who want direct property and gearing in their investment portfolio and who want to diversify risk away from the sharemarket.




1. Ability to borrow:

  • Approximately 70%-80% on residential property (assuming personal indemnities / guarantees are provided)
  • Approximately 60% – 70% on commercial property (assuming personal indemnities / guarantees are provided)


2. Tax benefits, namely:

  • Maximum 15% tax on rental payments
  • Interest costs are tax deductible
  • No capital gains tax if property sold in pension phase, or maximum 10% if sold after 12 months
  • Negative gearing benefits can be realised


3. Some benefits of investing in property in your SMSF:

  • Introduce leverage to your investment portfolio
  • Diversify risk through introducing another asset class
  • Rental yields of 4%+ (in Sydney) and tight rental vacancy rates
  • Tax benefits (as outlined above)


4. Some pitfalls to be aware of:

  • Double charging for stamp duty. It may sound obvious but if your holding trust is not set up correctly stamp duty can be double charged.
  • SMSF loans and stamp duty charges are complicated, so please confirm the legal structure of your SMSF loan with your accountant and consult a mortgage broker or finance professional to get the right SMSF lender for your individual circumstances.
  • Ensure your fund has enough money to meet loan repayments, sinking fund costs (if apartment or part of a complex), ongoing rates and maintenance costs etc.
  • As with any property investment, thoroughly research the area and know the demand for rental properties, compare similar recent property sales to understand market pricing and of course, view multiple properties.


For more advice when buying property, see our article on Top Ten Tips When Buying Sydney Property or contact us and see how our buyers agent services can help you build your investment property portfolio. We specialise in Sydney real estate, both investment property and residential homes.

Disclaimer: This information is provided as a general guide only. This information has been obtained from sources that Premier Home Finders believes to be reliable. Premier Home Finders makes no representations and accepts no responsibility or liability for, the accuracy or completeness of the information. Premier Home Finders is not a provider of legal, tax, financial or accounting advice and strongly recommends that you consult the relevant industry professional such as an accountant or financial adviser for such advice.

Click to Call Bernadette Brennan at Premier Home Finders on +61 410 568 244