All You Need to Know About an SMSF Property Investment

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Superannuation is a mechanism to give income for years to come, and investment in real estate is a long-term strategy. Therefore, provided you adhere to the guidelines established by the Australian Taxation Office, combining the two can be an effective investing strategy. Investing in SMSF property investment using your retirement funds through a self-managed super fund (SMSF) is feasible, but it’s crucial to understand the requirements, expenses, and hazards.

Having up to six members, the trustees of the fund or directors of the fund’s corporate trustee, a self-managed super fund is a superannuation fund that you run yourself. The trustee(s) are entirely in charge of managing all assets owned by the super fund and complying with all legal and regulatory obligations that come with managing a super fund. SMSFs are controlled by the Australian Taxation Office (ATO), as opposed to employer-specific funds or public offer super funds (sector funds or retail funds).

Benefits Of Using SMSF

Long-term, steady wealth generation

The value of a specific investment property may increase or decrease over time. Still, the property has been one of Australia’s most reliable investment options over the previous few decades. However, remember that past performance is not a reliable sign of future performance.

Wealth expansion

The potential that property offers for gearing (whether the income the property generates covers the cost of borrowing, commonly referred to as positive or negative) can help SMSF participants accelerate their long-term wealth development and reinvestment.

Benefits for company owners are increased.

The rules operate slightly differently, and there are some benefits when an SMSF includes a company owner, indicating that the property is used for commercial reasons. An employer can hold their commercial real estate under their SMSF and charge the SMSF market-value rent. The plan must still provide retirement benefits to the SMSF and pass the “sole purpose test.”

What Are the Expenses Associated With Super Real Estate Investing?

An SMSF must ensure that investing superannuation in real estate is a sound financial choice. There are other requirements in addition to demonstrating that the investment choice is consistent with the fund’s overall strategy. The SMSF must also ensure it has the resources necessary to handle and manage a significant investment, like real estate. The initial investment is the first and most significant cost of super real estate investing. A loan is more typical than having an SMSF’s cash on hand to pay for the property.

First, compared to other types of house loans, interest rates on SMSF loans are often higher. For ordinary loans, most lenders only permit an SMSF to borrow up to 70% or 80% of the property value. This is often between 70 and 80 per cent for commercial loans.

It’s vital to remember that not all expenses related to superannuation property investments are tax-deductible.According to the ATO, capital expenses do not qualify for tax deductions. Included are stamp duty, conveyancing fees, legal fees, and setup costs, such as setting up a bare trust.

Yet, the capital costs still frequently considerably outweigh the tax-deductible charges. According to the ATO, most ongoing costs, including interest payments. Property management fees, yearly council taxes, and insurance, are tax-deductible for the SMSF. Property depreciation is one of the most profitable tax deductions for investments owned by SMSFs.


It is possible to conduct an SMSF property investment utilising retirement money through a self-managed super fund (SMSF). Hence it’s essential to comprehend the prerequisites, costs, and risks involved with it.

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