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Buying Property Through Super: What You Need to Consider

Using your super to buy property can be a great idea. It can add value to your retirement fund but it is necessary to understand the rules as well as the advantages and disadvantages of doing so. Oak Tree Finances can help you navigate the regulations and take stock of your options. This blog will detail what you need to consider when buying property through super. For more information about this or other loan advice, contact us at 0404 403 066 for information tailored to your unique circumstances.

Buying Property Through Super – Self Managed Super Funds

Whilst every working Australian contributes to their superannuation there is only one option fund that allows buying property through super and that is via a self-managed super fund (SMSF).  Corporate, retail, and industry super allow the indirect purchase of property but only SMSF allows for direct purchasing or investment.

Residential property

SMSFs are an increasingly popular form of adding a property to your portfolio. There are several rules to consider when buying a residential property. The property is required to:

  • comply with the ‘sole purpose test’ of solely providing retirement benefits to fund members
  • be purchased from someone not related to a trustee
  • not be lived in or rented by anyone in the trust or related to a trustee

The rules are strict, so no buying a home in the hope that you can vacation in it during the holidays. Also, it does not matter how distant the relative is. ‘Not related’ strictly means not related by any means in this case.

Commercial property

The rules for commercial property are different. You may use SMSF to buy a commercial property, which can be leased to trustees for their business. Current market rental rates must be paid but the money goes into your SMSF instead of benefitting someone else.

Advantages to buying property through super

Reduced capital gains tax

Properties held for longer than twelve months get a one-third discount on any capital gains they make upon sale. This lowers capital gains tax liability down to 10%.

Tax efficiency

When you use an SMSF to buy property, the fund is legally obligated to pay 15% tax on any earnings. This is a smaller amount than what would be required if it was in your personal name.

More purchasing power

SMSF can consist of up to four members. This will allow you to pool your capital with the other members which in turn gives you greater ability to invest.

Disadvantages to buying property through super


There are many regulations and rules SMSF are required to follow when used to invest in a property. Additionally, the fines are significant if something goes wrong. Getting professional advice to properly understand everything is a must.


There are many fees associated with an SMSF property. They include:

  • bank fees
  • legal fees
  • upfront fees
  • advice fees
  • ongoing property management fees

SMSF property advice must be given from a licensed Australian financial services provider. Make sure you receive independent and comprehensive advice.

Lowered diversification

Be aware of the risk associated with smaller superannuation taking on a property. It may make up the majority of your investment which could potentially limit or harm your investment plan.


Following the rules is your responsibility. Know what you are responsible for and be aware that all trustees are personally liable for any actions taken by the SMSF. Be cognizant of the regulations for borrowing, asset valuation, and other obligations. Due to their complexity SMSF are best managed by discussing them with a qualified and experienced professional.

Interested to find out more?

The home loans Gold Coast team at Oak Tree Finances works with customers throughout Australia. We are ready to answer any questions you may have about using your superannuation to buy property or find you a home loan that is perfectly tailored to your unique circumstances. Get in touch on 0404 403 066 or via our online form to get started today.


* This content is intended as general advice only and does not take into account an individual’s circumstances. Please do not act upon any of the information contained here within without speaking to your independent mortgage broker beforehand.

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