How To Use Your SMSF To Invest In Property


Buying a property is one of the smartest investment strategies you can make, because unlike many other investment subjects, properties almost never decrease in value, on the contrary, there are big chances that their value will increase with the years. On the other hand, a reliable way of investing in the future, or more specifically for pension days is SMSF or also known as Self Managed Superannuation Fund. When you combine these two ways of saving for retirement you get a winning combination. To make it more clear, what I refer to concretely is using the assets from your SMSF for property investment.

Invest In Property

You can borrow money from your SMSF fund to make a property investment, but solely by following the strict rules from ATO (the Australian Taxation Office) on this subject. Some of the notable rules you ought to take into account before you make a property investment by using your self managed superannuation fund are:

  • The main purpose of the property investment is to provide retirement benefits for the members taking part of the fund;
  • Seller of the property cannot be a party related to some of the fund members;
  • The fund members cannot use the property for residential or commercial use, nor can some other party related to them;
  • None of the fund members nor a their related party can rent the property for any kind of use;

Ok, now that you know the basic rules by ATO, you must be asking yourself what kind of property investment you can make. Unlike when it comes to the use of the purchased property, the rules in respect of choosing the type of property are not that strict. Namely, you can use your SMSF to buy any type of property, such as: commercial, residential or industrial. Also there are no limitations whether the property is listed or unlisted.

As you can conclude, you can use your SMSF to make a property investment but under the condition to lease it to third party. Leasing the property gives you a possibility to grow the assets of your fund. This technically means that by investing in property using the assets of the SMSF fund can be a great long-term investment strategy that will generate significant savings (you can use after your retirement) down the road. If want to learn more about how you can do this, we recommend you a consultation with an attorney specialized in this field.

Goran Nikolov is a content writer of Protista, a website where you can find a lot of interesting lists. He is from Macedonia and has a passion to write lists about everything that surrounds him, especially about sports, health, music, technology and history. Goran loves to play basketball in his free time, enjoys playing on his guitar and sharing his thoughts with others.