Can You Buy Property Through an SMSF?
Yes. A Self-Managed Super Fund can purchase residential investment property using a Limited Recourse Borrowing Arrangement (LRBA). The property is held in a separate Bare Trust until the loan is fully repaid.
Minimum requirements:
- SMSF balance: $120,000–$190,000 (enough for 20% deposit + costs)
- Setup cost: ~$1,760 (one-time)
- Annual accounting: ~$2,200
- Annual audit: ~$1,100
- Loan interest rate: 6.8–7.5% (approximately 1% higher than personal loans)
- Maximum LVR: 80%
The big advantage: When you retire (age 60+) and move to pension phase, capital gains tax on property sale is 0%. This can save hundreds of thousands in tax over a lifetime.
What You CANNOT Do with SMSF Property
SMSF property rules are strict. Violations can result in the ATO taxing your entire super fund at 45%.
Cannot do while loan exists:
- Build a granny flat or any new structure
- Subdivide the land
- Perform major renovations (structural changes)
- Change the property's character
Can do:
- Cosmetic repairs (painting, carpet replacement, minor fixes)
- Maintain the property to rentable standard
- Claim depreciation and holding costs
Our SMSF strategy: Buy a move-in-ready property in a stable growth area (Ballarat, Bendigo, Geelong) that doesn't need renovation. Target $450K–$500K purchase price with $420/week rent for 5–6% yield. Absolutely positive cash flow from day one, with 8–10% annual growth projected over 10+ years. CGT-free sale in pension phase.
SMSF vs Personal Name — Which Is Better?
Choose SMSF when:
- You have $120K+ in super and don't need the money before retirement
- You want CGT-free gains (pension phase)
- You're buying a property that needs NO renovation or construction
- You're planning a 10+ year hold
Choose Personal Name when:
- You want to add a granny flat or do renovations (not possible with SMSF loan)
- You want to subdivide the land
- You need flexibility to sell within 5 years
- You want to use negative gearing (more effective at personal tax rates vs 15% super tax rate)
Choose Family Trust when:
- You have multiple family members to distribute income to
- You want asset protection from personal liability
- Note: Land tax is higher for trusts (~$4,000 on $100K land vs ~$1,900 for individuals)