Discover why 'SMSF Property' is the fastest-growing Investment Strategy

More and more Australian investors are investing into real estate using their super.

Thanks to a Self-Managed Superannuation Fund (SMSF), you can now use your accumulated savings and ongoing contributions to gear into property investments.

But bear in mind that there are many rules to comply with and investing into property using your super requires a lot of preparation.

TENX Wealth can help you ensure that your SMSF strategy is suitable to your investment goals.

Rules in Buying Property with SMSF

You can only invest in real estate through your SMSF if you comply with specific rules. The real estate property should:

You can only invest in real estate through your SMSF if you comply with specific rules. The real estate property should:

  • Pass the ‘sole purpose test’, which means that the investment should help you in retirement
  • Not be purchased from a relative of the member
  • Not be occupied by the member or any relative of the member
  • Not be rented out to the member or any relative of the member

Take note that if you use SMSF to purchase commercial properties, you can lease it out for your business. But it should still comply with the market rate and comply with certain rules.

Buying a Property in SMSF

If you acquire a property using your SMSF, the legal owner will be a certain holding trust.

However, the SMSF will have a beneficial ownership so your fund will be credited with revenue and the asset will benefit from capital growth.

Normally, the property will be held by a Trust, while the loan will be taken out by the Fund. This makes it a bit more complicated and requires more work compared to a regular investment loan.

Using SMSF for property investments can be overwhelming so you may need to work with an investment advisor like the team at TENX Wealth who has the expertise to effectively help you

Before You Use SMSF Property As an Investment Strategy

Using your SMSF to invest in property can be exciting but do think twice before you take any decision as your retirement fund is at stake.

Do your own research. Team up with licensed professionals who can help you reduce the risk of SMSF property investments and to check if the strategy is suitable for you, based on your goals and personal circumstances.

Frequently Asked Questions

Can you use super to buy an investment property?

SMSF stands for Self-Managed Super Fund. This is a trust fund that is managed by its members and subject to specific rules that govern the superannuation system in Australia. It mainly provides retirement income to the members of the trust.

Like all superannuation funds, SMSFs should adhere to the same laws and policies established by the Superannuation Industry Supervision Act. However, they are supervised and administered by the Australian Taxation Office (ATO). 

How can you earn money from property syndication?

Yes, you can use your SMSF to buy an investment property as long as the asset will be used to help you in retirement. 

Also, the property should not be purchased from a party related to the member and should not be occupied or rented out by the member or his or her relatives. 

SMSF can also be used to acquire commercial properties and can be leased out to the member’s business if it complies with specific rules set out by ATO and follows the prevailing market rates.

What are the costs associated in using SMSF to buy a property?

Using SMSF to purchase a property may incur some costs and fees that may add up and even reduce your fund.

The typical costs include:

  • Upfront fees
  • Investment advice fees
  • Property management fees
  • Legal fees
  • Stamp duty
  • Mortgage fees

Be sure to check these costs before you sign any deal involving your SMSF to buy a property. It is highly recommended you to get independent advice. 

What are the benefits of using SMSF to buy property?

Here are some of the benefits of using SMSF for investment property acquisition:

  • You can diversify your investment portfolio
  • You’ll have more control over the property compared with other investments
  • You may enjoy investment returns in form of rental income plus long-term capital growth
  • Special tax incentives for SMSF investors 

Like all investments, there are inherent risks in using your SMSF, which should be carefully assessed into your personal circumstances and investment goals.

Talk to a Property Investment Advisor Today 

TENX Wealth Australia has a team of investment advisors who can help you determine using your SMSF to invest in real estate is the right approach for your investment goals.