Why Your SMSF Might Be the Key to Your Next Investment Property

With property prices climbing again and more lenders re-entering the SMSF space, the landscape for SMSF property investment is shifting.

At Causbrooks Finance, we specialise in helping clients tap into their Self-Managed Super Fund (SMSF) to invest in residential property, commercial property, and more — all while ensuring compliance with the Australian Taxation Office (ATO).

This guide walks you through how the process works, the benefits, and the risks to be aware of.

Why Consider Property Investment using your SMSF?

Using your SMSF to purchase an investment property takes advantage of the flexibility in how your super savings gets invested. There are other reasons why you might want to consider starting a Self-Managed Super Fund for purchasing property, including the potential for significant tax benefits.

1. Tax Benefits

SMSFs can offer compelling tax benefits.

For example, rental income from an SMSF-owned property is taxed at just 15% in accumulation phase, and if the property is held for more than 12 months, Capital Gains Tax (CGT) is effectively capped at a 10% effective tax rate.

Once your fund enters pension phase, capital growth becomes even more attractive — part or all of any realised capital gain will be tax-free.

2. Retirement Benefits

By investing in property through your SMSF,you're building long-term retirement savings in a controlled, tangible way. The right property investment can provide reliable income during retirement while preserving your super balance. Additionally, any rental income received while your SMSF is in pension phase is tax-free.  

3. Control Over Investment Strategy

Unlike retail funds, an SMSF lets you make direct decisions — from building a diversified property portfolio to improving your asset through property improvements (within compliance limits). This level of control appeals to savvy property investors who want to manage risk and returns closely.

4. Leverage Through Limited Recourse Borrowing

With an SMSF, you can borrow using a Limited Recourse Borrowing Arrangement (LRBA) — a unique loan structure that allows your fund to acquire property typically with a deposit of around 20–30%. This means your Self-Managed Super Fund (SMSF) can enter the market without needing the full property value upfront. Using debt for your investment is a means of leverage which can fast track your fund's growth.

The SMSF Property Purchase Process

Here’s how a compliant SMSF property purchase typically works:

1. Set Up a Compliant SMSF

To begin, you'll need a Self-Managed Super Fund with an appropriate trust deed, investment strategy, and either corporate or individual trustees. The fund must be established solely for the purpose of providing retirement benefits to its fund members. If your current accountant is not able to set up an SMSF for you, reach out to our sister company, chartered accounting firm Causbrooks, who are experts in all things SMSF.

2. Establish a Bare Trust

Under the LRBA structure, your SMSF cannot hold the property directly. Instead, a bare trust (also called a holding trust) is created to legally hold the property on behalf of your SMSF.

3. Rollover Super into the Fund

Next, consolidate your existing super balances to ensure the fund has enough to cover the property purchase deposit, stamp duty, legal fees, and a buffer for loan repayments and property maintenance.

4. Get SMSF Loan Pre-Approval

Banks and specialist lenders offer SMSF property loans, but approval can be tricky. We help you navigate lender policy, ensuring your application includes all required documents — including confirmation of ATO compliance, fund deed, and trust structure.

5. Acquire the Property

Once pre-approved, your SMSF can proceed with the property purchase. The asset must meet the sole purpose test — that is, it must be used only to provide retirement income, not for personal or related-party use. You can’t live in the property or rent it to family.

What Kind of Property Can You Buy?

Your SMSFcan invest in

• Residential property (for investment purposes only)
• Commercial property, such as a warehouse or office — ideal for business real property where you operate your own business

We regularly help clients buy business real property through their SMSF to stop paying rent to third parties and instead have their business pay rent to their own super fund — a strategy that aligns personal and business wealth building.

Compliance and ATO Guidelines

SMSF borrowing and property investing is tightly regulated.

You must:

• Follow ATO rules, including the related party and in-house asset restrictions
• Ensure the property aligns with your SMSF investment strategy
• Keep everything at arm’s length, including rental agreements and property management
• Pay property management fees, rates, and insurance from the SMSF account only

There are also limitations around property improvements and property costs, so it's critical to stay informed and compliant.

Why Work with Causbrooks Finance?

SMSF lending isn’t like traditional lending.

You need a specialist who understands:

• The nuances of SMSF property loans
• How to structure the bare trust and SMSF portfolio
• The implications of concessional tax rates, trustee responsibilities, and ATO obligations

At Causbrooks Finance, we work with your accountant, solicitor, and adviser to structure every step — from pre-approval to settlement — ensuring a seamless, compliant experience.

Is SMSF Property Investment Right for You?

Using your SMSF to invest in property isn’t for everyone.

It requires:

• A sufficient super balance to cover deposit and fees
• A long-term investment mindset
• Willingness to manage compliance and reporting

But for the right investor, the rewards can be substantial — from capital growth and rental income, to smarter tax outcomes and greater retirement security.