In the past few years there has been an increase in people setting up their own super funds so that they can control over their own super and investment strategies.  As the name suggests a self managed super fund is just that- it is managed by YOU. This means YOU get to control what you are buying and investing.  As a result of this, a lot of our clients are now buying property through their own Self Managed Super Fund as property is now seen to be one of the best investments we can make.

The advantages of buying property through super is that it is often the most tax effective way of buying an investment property because there are better tax treatment for repayments made on the veinstmetn and lower tax when the property becomes positively geared and lower capital gains when the property is sold.

A basic overview on how this is done is:-

Seek advice to set up your own SMSF

The rules and regulations for setting up and borrowing through a SMSF are complex. So it’s important that you obtain specialist financial planning, accounting and legal advice to make sure this investment strategy is right for you. Most accountants are able to set up a SMSF for you.

Review your SMSF trust documentation

If you already have a SMSF, you’ll need to make sure you have the necessary powers to borrow under your fund. Again, it’s important you seek appropriate advice.

Set up a separate trust

The first step to purchasing an investment property through your SMSF is setting up a separate security trust on behalf of your SMSF. This new trust will buy and hold the property, and provide a guarantee for your loan. Once again most accountants are able to do this.

Loans to SMSFs are “limited recourse loans”. This means that if you default the bank can only access:

  • the investment property
  • any other property securing the loan

The bank won’t be able to access your other super assets.

Funding your investment

Like regular property investment, you’ll need a deposit from your self managed super fund, and a loan to cover the difference. You’ll need to take into consideration how much the bank will lend you, and how much your SMSF will need to provide for the deposit, stamp duty, legal fees, loan fees etc. Most banks will lend between 60%-80% of the property purchase price for the purchase of a property through SMSF depending on the property type.

When you compare the loans offered by different banks you need to check interest rates and set up fees carefully – that’s where we come in – we can do that for you and help you through the process completely free of charge!!!

The trust buys and holds the property

The trust buys and holds the property on trust for your SMSF.

Rent  from the property goes towards the payments for the loan. If this rent doesn’t completely cover your loan repayments, the extra needs to come from your SMSF.

You’ll need to consider your cash flow when thinking about this investment type. Again, professional advice is important.

After the loan is paid off

Once your loan is fully repaid, the property can be transferred from the security trust to your SMSF.

For more detailed information feel free to call us or make an appointment to see us at any time.

We may get commissions for purchases made using links in this post. Learn more.
  • so much good info in regards. it is all helpful and something to definately consider. cheers


  • Really very good knowledge to know! Thanks for sharing this article!


  • thanks for sharing was a great read


  • I’ve never quite understood self managed funds, thanks for the interesting read.


  • Fantastic ideas, thank you heaps:)


  • Well written informative article thanks for sharing


  • Good read thanks for the information


  • If I had a super currently with 195,000 in what would be my allowed purchase of a property. I am looking at a 515,000 for an apartment. Would this be feasible,?


  • thank you sharing this article good read


  • thanks for sharing was a great read


  • I’d love to make time to think all of this through. Must do!

    • I know – sounds really interesting


  • Thanks for sharing this article. Very informative.


  • Enjoyed reading – thanks for sharing!


  • Would consider something like this if I had the extra funds available


  • That is an interest blog. Have to say I have been in the dark regarding this matter.


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