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Can I buy Vacant Land in my SMSF?
What are the tax consequences of small scale property development?
May 7, 2025I’d like to rent out a room in my house
May 20, 2025
Yes, you can use your Self Managed Super Fund (SMSF) to purchase vacant land. However, you must adhere to specific rules and restrictions, especially when borrowing to finance the purchase. The SMSF must be used for the sole purpose of retirement benefits, and the investment strategy must allow for property investment. Additionally, if borrowing is involved, it must be through a Limited Recourse Borrowing Agreement (LRBA).
- Investment Strategy:
Your SMSF’s investment strategy must explicitly permit property investments, including vacant land.
- Sole Purpose Test:
The land purchase must be for the sole purpose of benefiting the fund members (in the context of retirement), not for speculative or short-term gains.
- Limited Recourse Borrowing Arrangement (LRBA):
If you borrow to purchase the land, you’ll need to set up an LRBA. This arrangement limits the lender’s recourse to the property being purchased, not the other assets of the fund.
- No In-House Assets Exceeding 5%:
The land cannot be used for a business or any other activity that would classify it as an in-house asset, which can only be up to 5% of the fund’s total assets.
- Single Acquirable Asset:
