Buying Property in SMSF

When was the last time you checked where your superannuation is invested — and more importantly, how it’s performing?

For many Australians, super remains an overlooked asset until retirement starts creeping closer. But for those willing to take a more active role, a Self-Managed Super Fund (SMSF) offers a unique opportunity to take control of your financial future today.

An SMSF gives you direct oversight over how your retirement savings are invested. Rather than relying on a traditional fund manager’s decisions, you make those calls yourself. This greater flexibility can open the door to a wider range of investment opportunities, tailored to your personal financial goals and risk appetite.

What Can You Invest In?

Unlike many traditional superannuation funds, an SMSF lets you diversify beyond standard managed portfolios. Through an SMSF, you can invest directly in

• Residential property;
• Commercial property (which you can lease to your own business);
• Australian and international shares;
• Term deposits and cash;
• Managed funds; and
• Infrastructure and other alternative assets.

This flexibility can be a major advantage, allowing you to craft an investment strategy that’s much more aligned with your personal vision for wealth creation.

One of the most popular strategies for SMSF investors is property investment. By purchasing residential or commercial property through your SMSF, you can enjoy the combined benefits of stable rental income, potential capital growth, and superannuation’s favourable tax treatment.

What Are the Tax Benefits?

The tax advantages of SMSF investing can be significant:

• Rental income generated by property within the SMSF is taxed at just 15% during the accumulation phase.
• Capital gains on assets held for more than 12 months receive a one-third discount, effectively reducing CGT to 10%.
• Once the youngest SMSF trustee reaches retirement age, both rental income and capital gains may become entirely tax-free.

This means that, strategically, investing within an SMSF can significantly boost your after-tax returns compared to investing in property personally.

What Are the Responsibilities?

Of course, with greater control comes greater responsibility. SMSF trustees must comply with strict regulations set by the Australian Taxation Office (ATO), including:

• Ensuring investments meet the ‘sole purpose test’ (i.e., providing retirement benefits to fund members);
• Keeping proper records and arranging annual audits;
• Ensuring the fund remains compliant with contribution caps, borrowing limits, and reporting obligations; and
• It’s also important to remember that all decisions made by the trustees must be in the best financial interest of all members at all times.

It’s essential to seek professional advice from SMSF specialists such as Rider Accountants & Advisors who understand the regulatory landscape and can guide you through the process of setting up, structuring, and running your fund properly.

How Does Borrowing Through an SMSF Work?

Many SMSF investors use borrowing to purchase property, under what’s called a Limited Recourse Borrowing Arrangement (LRBA).

An LRBA allows your SMSF to take out a loan to acquire an asset, with the lender’s rights limited only to the asset itself (not to the broader SMSF assets) if the loan defaults.

Additionally, SMSF borrowing allows you to invest in property without affecting your personal servicing capacity, as the loan is secured against the property within the fund and not your personal income or assets.

Currently, SMSF lending rates are ranging between 6.84% – 7.19%, depending on the lender, LVR and specific loan terms.

However, SMSF loans do require a different structure than standard loans, including:

• Higher deposit requirements (often 20–30%);
• Separate bare trusts to hold the property; and
• Strict lending criteria and compliance requirements.

This is where expert guidance makes all the difference. Choosing the wrong structure or missing a compliance step can have serious consequences for your fund’s tax status and overall viability.

How Rider Accountants Can Help?

At the Rider Financial Group, we specialise in helping Australians invest through their SMSF with confidence.

Whether you’re exploring SMSF investing for the first time or you’re ready to purchase your next property, our SMSF specialists can help with:

• Tailored lending solutions designed for SMSFs
• Access to a broad panel of SMSF loan providers
• Connections to trusted Property Advisors and SMSF auditors if needed

We simplify the process from start to finish, helping you navigate complexity so you can focus on building your retirement wealth.