Everyone is familiar with the idea of buying a property for investment purposes. And everyone is familiar with the idea of saving for retirement through superannuation. But a lot of people are unfamiliar with the idea of buying an investment property through a self-managed superannuation fund (SMSF).

So let’s quickly explain how it works.

What is a SMSF?

Traditionally, employers contribute to employees’ retirement funds and a superannuation provider manages and invests the money. With a SMSF, you act as the trustee to manage and invest the funds yourself. You can have up to four trustees, which is ideal if you plan to have investment partners.

You can invest SMSF funds in a range of asset classes, including shares, bonds and property. There is a caveat, though. The sole purpose of using a SMSF to buy property is to provide retirement funds to the members. That means you can only buy property for the purposes of renting it out and generating income. You can’t use the fund to buy residential property in which you or any family members plan to live.

The pros and cons of using a SMSF to buy property

While buying property through a SMSF offers some great benefits, there are a few downsides to be aware of.


  • Puts the control of your retirement funds in your hands
  • You can purchase multiple properties
  • SMSF funds are taxed at 15%, much lower than the rate you would pay on investments in your own name
  • Should you sell the property after 12 months, you’ll receive a one-third discount on capital gains tax; if you sell when the SMSF is in the pension phase, capital gains tax is waived


  • Your or your family members can’t live in the property
  • A trustee or anyone related to the trustee can’t rent the property
  • You can’t use the fund to buy property owned by a trustee or anyone related to the trustee

How to buy property through your SMSF

If, after weighing up the pros and cons, you’re still keen on the idea, here’s how to set up your SMSF for property investing.

1. Decide on a structure

You can set up your SMSF with you and your partners as trustees or you can appoint a corporate trustee where a company acts as trustee for the fund.

2. Open a bank account

Set up a bank account for the fund that is separate from the bank accounts owned by you and the other trustees. That makes accounting easier. 

3. Register with the ATO

You are required to register your fund with the Australian Tax Office (ATO) and comply with all SMSF and tax laws.

4. Hire an accountant

Managing property investing through a SMSF comes loaded with administration, fees and audits. An accountant will manage the day-to-day running of the fund, prepare the annual financial statements, submit an annual tax return and can provide tax advice.

4. Consult with a property lawyer

Buying property through your SMSF has a different set of rules to property transactions using a home loan. Unless you’re skilled at SMSF law, it’s best to consult with a property lawyer who can guide you through the property and conveyancing process.

Adam Zuchowski is our property law special counsel.

Sutton Laurence King specialise in property conveyancing for SMSF property transactions. Before you sign a contract and transfer property titles, call us at 03 9070 9810.