Can my SMSF buy property?

Yes, if its trust deed allows it, the purchase fits the fund's investment strategy, and the property is held only to provide retirement benefits. An SMSF generally can't buy from members or relatives unless the property is business real property bought at market value. New SMSF loans entered into from 10 August 2026 can only fund business real property.

What does the fund need before it buys?

Start with the trust deed. It is the fund's rulebook, and it must allow the trustee to invest in property, and to borrow if the fund plans to. Older deeds sometimes don't. The trustee must also formulate, regularly review and follow an investment strategy that considers risk and return, diversification, liquidity and the fund's ability to pay its liabilities (Superannuation Industry (Supervision) Act 1993, section 52B). One property can be a large share of a fund, so the strategy should explain why that is acceptable. If you are still deciding, our article Is property investment the right strategy for your SMSF? sets out the questions to ask your adviser.

What is the sole purpose test?

Every SMSF must be maintained solely to provide retirement benefits to its members, or benefits to their dependants if they die (section 62). For property, that means nobody connected with the fund can get a benefit from it now. The ATO gives holidaying in the fund's property as an example of a breach, and says buying a rental property so that a related party can live in it breaches the test. A breach can cost the fund its tax concessions and expose the trustees to penalties.

Does it matter whether the property is residential or commercial?

Yes. Business real property is land and buildings used wholly and exclusively in a business. It gets three advantages:

• it is an exception to the ban on buying assets from related parties, so the fund can buy a member's business premises at market value
• it can be leased to a related party, such as the member's own business, under a legally enforceable lease on commercial terms
• from 10 August 2026 it is the only kind of real property a fund can buy with a new limited recourse borrowing arrangement.

Residential property can still be bought, but only from someone unrelated to the fund and, for a new purchase, only with money the fund already has. Members and their relatives can't live in it or rent it: see Can I live in my SMSF property, or rent it to family?

Who counts as a related party?

Every member of the fund, their relatives, their business partners (and those partners' spouses and children), and any company or trust a member or their associates control or influence. "Relative" is wide: parents, grandparents, brothers, sisters, uncles, aunts, nephews, nieces and children of the member or their spouse, and the spouses of all of them. The rules on buying from these people are in Can my SMSF buy property from me or a relative?

Can the fund borrow to buy?

Only through a limited recourse borrowing arrangement (LRBA). The property is held in a separate holding trust until the loan is repaid, and the lender can only claim that property if the fund defaults. The law changed on 10 August 2026: an LRBA entered into on or after that date can only be used to buy business real property, and the property must stay business real property for the whole life of the loan. The change doesn't affect LRBAs already in place, the refinancing of those loans, or purchases where the fund exchanged a binding contract before 10 August 2026. Our explainers on limited recourse borrowing and the bare trust cover how the structure works.

Where should the money come from?

The deposit, the balance and the costs should all come from the fund's own bank account. The ATO expects fund assets to be kept separate from members' personal assets and clearly owned by the fund. A deposit paid from a member's account blurs who is buying, may be treated as a contribution, and where the fund is borrowing can put state duty exemptions at risk.

What happens at the contract stage?

The contract has to name the buyer exactly, and the right name depends on whether the fund is borrowing and which state the property is in. See Whose name goes on the contract? Before your trustee signs, have a lawyer check the contract and the seller's disclosure. From there the purchase runs much like any other: see Buying property in an SMSF.