Buying Property Through Your Super: What You Need to Know About SMSF Investments

A Smarter Way to Invest in Property

For many Australians, superannuation is their largest financial asset outside the family home. But while most people leave their super in managed funds, a growing number are discovering they can take a more hands-on approach — by purchasing property through a self-managed super fund (SMSF).

That was the topic of conversation on Hot Property with 91.1 Hot FM’s Jade and Paul from Broker Co, who joined the show to demystify how buying property with your super actually works. With interest rates holding steady and investors looking for alternative strategies, the timing couldn’t be better.

“It’s an alternative way to get into the investment market,” Paul explained, “utilising your self-managed super fund.”

How Much Do You Need to Start?

A common misconception is that you need hundreds of thousands of dollars before an SMSF becomes worthwhile. According to Paul, that benchmark has shifted slightly — but there’s still a sensible threshold to make the numbers work.

“Benchmarks are generally around the $200,000 mark,” he said. “That allows you to cover your 20% deposit, purchase costs, and still have enough funds left in the super for diversified investments — whether that’s cash, managed funds, or shares.”

Essentially, an SMSF should be structured to maintain balance. Even if you’re purchasing a property, you’ll want other assets within the fund to spread risk and meet compliance requirements.

Setting Up an SMSF for Property

Buying property through an SMSF isn’t as simple as clicking “buy now.” There are several legal and administrative layers that need to be in place before the purchase can go ahead.

“There needs to be a financial planner or an accountant involved,” Paul noted. “You need to get a statement of advice to show that you’ve been given the correct financial advice around that super fund strategy.”

The self-managed fund must also be compliant with superannuation laws before it can purchase any property. Compliance is essential, as the Australian Taxation Office (ATO) closely monitors how SMSFs are managed and what investments they hold.

The Role of the Bare Trust

One of the more technical parts of SMSF property investing is the bare trust — a legal structure that acts as the purchasing entity for the property.

“When it’s time to purchase the property, the fund itself can’t buy it directly,” Paul explained. “That’s where the creation of a bare trust comes into play. It sits beneath the super fund, and that’s the entity that goes on the contract of sale.”

In other words, while your SMSF is the beneficial owner of the property, the bare trust holds the legal title. This structure protects the integrity of the super fund and ensures that borrowing arrangements comply with ATO rules.

Timing and Preparation Matter

Setting up an SMSF and purchasing property through it isn’t an overnight process. Paul emphasised that planning ahead is essential.

“Preparation is key,” he said. “It takes time dealing with planners, accountants, and getting everything set up correctly. Rolling your super over from your existing fund to the self-managed super fund can take time.”

Once the structure is ready, that’s when the finance component comes into play. Broker Co typically steps in at that stage to arrange pre-approval and ensure clients are ready to act when the right property appears.

“We get a pre-approval set up, ready to go,” Paul said, “and then it’s time for you to go shopping.”

The overall setup period usually takes around a month, depending on how quickly the necessary financial and legal steps can be completed.

What You Can (and Can’t) Buy

While the idea of using your super to buy property is appealing, not every type of property qualifies. The investment must meet the “sole purpose test” — meaning it’s held purely to provide retirement benefits to the fund’s members.

That means you can’t live in or rent out the property to family members. It also needs to be a genuine investment asset, such as a residential unit, commercial property, or industrial space with tenants in place.

If managed properly, this can be a tax-effective way to grow your wealth, since rental income and capital gains within a compliant SMSF are generally taxed at concessional rates.

Why Professional Advice is Essential

An SMSF property purchase isn’t a DIY project. It involves coordination between accountants, licensed financial planners, and mortgage brokers who specialise in SMSF lending.

“It’s straightforward,” Paul said, “but it’s got a couple of layers of legal complexity.”

By seeking professional guidance early, you can avoid compliance pitfalls and ensure your investment aligns with your broader retirement strategy.

Final Thoughts

Buying property through your super fund isn’t for everyone, but for investors looking to diversify and take more control of their financial future, it’s a compelling option. As Paul summed up, success comes down to planning, compliance, and expert advice.

So before you fall in love with that $800,000 investment unit, make sure your structure is in place — your SMSF set up, your bare trust ready, and your pre-approval secured.

That way, when opportunity knocks, your super is ready to answer.