SMSF Property Investment FAQ
Essential Information for SMSF Investors Buying a New Home
Yes, your SMSF can invest in residential property, but strict rules apply. The property must be for investment purposes only—you or related parties cannot live in it.
When using an SMSF loan (Limited Recourse Borrowing Arrangement – LRBA), lenders typically require a 20-30% deposit, plus enough cash in the fund for loan repayments and expenses.
- Rental income is taxed at a concessional rate of 15% during the accumulation phase.
- If held for over 12 months, capital gains tax is discounted to 10%.
- In retirement phase, rental income and capital gains may be tax-free if the property is supporting a pension.
- The loan must be structured as a Limited Recourse Borrowing Arrangement (LRBA), meaning the lender’s claim is limited to the property itself.
- No redraws or refinancing—you cannot borrow more once the loan is in place.
- Some banks have higher interest rates and stricter conditions for SMSF loans.
No, major renovations or developments using borrowed funds are not allowed. The property must remain in its original state during the loan term, though minor maintenance is permitted.
All loan repayments must come from fund assets (such as rental income and super contributions). If funds run low, additional personal contributions must comply with superannuation contribution caps.
The base price covers the standard home structure and inclusions, but site costs, landscaping, fencing, and upgrades may be extra. A fixed-price contract can help with budgeting.
Yes! A tax depreciation schedule can help you claim deductions on the building and fixtures. However, depreciation benefits are limited for properties held in pension phase.
If the property is held in the SMSF’s pension phase, rental income and capital gains may become tax-free. You can also sell the property or transfer it in-specie to a member if eligible.
Yes, but capital gains tax applies if sold during the accumulation phase. If sold while in pension phase, CGT may be reduced or eliminated depending on your SMSF’s structure.