A step-by-step guide to buying residential or commercial property through your Self-Managed Super Fund — covering both cash purchase and LRBA borrowing options, rules, costs and tax advantages. You can purchase property outright with your SMSF's cash balance, or borrow using a Limited Recourse Borrowing Arrangement (LRBA). Both have different requirements, costs and considerations. Buy with your SMSF's existing super balance — no loan required Borrow to buy using a Limited Recourse Borrowing Arrangement SMSF property investment is heavily regulated. Getting these rules wrong can result in ATO penalties, loss of tax concessions and forced sale of the property. Key distinction: Residential property cannot be leased to related parties — but commercial property can (at market rent). This makes commercial property uniquely powerful for business owners who want to lease their premises through their SMSF. Example based on a $650,000 NSW residential property with 70% LVR LRBA. All figures are estimates. Stamp duty estimate for NSW only. Rates vary significantly by state. Use our Property Calculator for your state's exact stamp duty. The tax treatment inside an SMSF is significantly more favourable than holding property as an individual investor or in a company. Rental income in accumulation phase is taxed at just 15% — compared to up to 47% personally. In pension phase, the tax rate drops to 0%. If your SMSF sells property held for more than 12 months, the CGT rate is 10% — versus up to 23.5% personally (after 50% discount). Once all members are in pension phase, there is zero tax on rental income and zero CGT on property sold. This is one of the most powerful retirement strategies available. Interest on your SMSF property loan is generally deductible against the fund's rental income, reducing the taxable income of the fund. Your SMSF can claim building depreciation and plant & equipment depreciation against rental income, further reducing the fund's tax liability. Commercial property owners can lease premises to their own business at market rent. Rent is deductible to the business and received by the fund at 15% tax. My SMSF has been helping Australians purchase property through their super since 2010. We handle the setup, structure, and ongoing administration — so you can focus on the investment. Disclaimer: All information is general in nature and for educational purposes only. My SMSF does not provide financial, legal or taxation advice. Tax benefits described depend on individual circumstances and may change. Always seek independent financial and legal advice before making investment decisions. R S Capital Partners Pty Ltd A.B.N: 67 145 282 908 trades as My SMSF / My SMSF Property.
How Do I Purchase Property in My SMSF?
Quick Answer
Two Ways to Buy Property in Your SMSF
Cash Purchase
LRBA Borrowing
What You Can and Cannot Do
What Your SMSF CAN Do
What Your SMSF CANNOT Do
Typical Costs to Buy a $650,000 Property
Cost Item Cash Purchase LRBA (70% LVR) SMSF SetupIf new fund — corporate trustee, deed, ABN/TFN $990 $990 Deposit / EquityCash: full price · LRBA: 30% deposit $650,000 $195,000 Stamp Duty (NSW)Varies by state — calculated on purchase price ~$24,457 ~$24,457 Conveyancing & LegalSMSF property conveyancer recommended ~$2,000 ~$2,000 Bare Trust DeedLRBA only — holding trust establishment N/A ~$1,500 Building & Pest Inspection ~$600 ~$600 Loan Application FeeLRBA — varies by lender N/A ~$600 Annual AdministrationMy SMSF — tax return, audit, statements $1,190/yr $1,190/yr Total Upfront Required ~$678,047 ~$225,147 Why Property in Your SMSF Beats Holding It Personally
Tax on Rental Income
CGT in Accumulation Phase
Tax in Pension Phase
Interest on LRBA Loan
Depreciation Claims
Lease to Your Business
Frequently Asked Questions
Ready to Buy Property in Your SMSF?
How Do I Purchase Property in SMSF?
Complete Guide
Your SMSF must be established first with a corporate trustee
Update your investment strategy to allow property
Property must meet the "sole purpose test"
You can buy with cash OR borrow via an LRBA
Property must be held in fund name (or bare trust)
You cannot live in or rent to related parties (residential)
My SMSF handles all setup and ongoing administration
Choose Your Path
Simpler
No borrowing structure needed
No LRBA or bare trust needed — simpler structure
Lower ongoing costs — no interest or loan fees
Property held directly in SMSF name
No lender approval process required
Faster settlement possible
Requires full purchase price available in SMSF
May limit diversification of fund assets
Need to maintain sufficient liquidity in fund
More Leverage
Typically 70–80% LVR available
Buy a larger property than your cash balance allows
Loan secured only against the property (limited recourse)
Other SMSF assets protected if property fails
Interest payments may be tax-deductible to the fund
Potentially higher returns through leverage
Requires a bare/holding trust structure
More complex — lender approval required
SMSF balance typically $200k+ recommended
ATO Compliance
Purchase residential property for investment (rental) purposes
Purchase commercial property and lease to any tenant including related parties at market rent
Borrow to buy property via an LRBA structure
Earn rental income taxed at 15% (or 0% in pension phase)
Sell property with CGT discount — 10% after 12 months (0% in pension)
Own property in a partnership with unrelated entities in some circumstances
Purchase commercial property already leased by your business (if at market rent)
Let SMSF members or relatives live in a residential property
Rent residential property to related parties (spouse, children, parents)
Use SMSF property as security for a personal loan
Buy a property already owned by a related party (in most cases)
Mix SMSF and personal funds to buy the same property
Improve LRBA property beyond maintenance using borrowed funds
Have the property benefit members before retirement (sole purpose test)
Cost Breakdown
Tax Advantages
15%
10%
0%
Deductible
Deductible
Business Owners
Common Questions
There is no legal minimum, but practically you need enough to cover the deposit plus costs while maintaining sufficient liquidity. For LRBA loans, most lenders require a minimum SMSF balance of $200,000–$250,000. For a cash purchase, you need the full property price plus costs. Use our Property Calculator to check your situation.
In most cases, no. Your SMSF generally cannot buy assets from related parties at any price, with limited exceptions for listed securities and business real property leased at market value. Attempting to do so can result in the fund being declared non-compliant.
For a cash purchase, the property is held in the name of the corporate trustee on behalf of the SMSF (e.g. "ABC Pty Ltd ATF The Smith SMSF"). For an LRBA, the property is initially held in a bare/holding trust until the loan is repaid, then transfers to the SMSF trustee.
You can do maintenance and repairs, but you cannot improve the property using borrowed funds under an LRBA. This means significant renovations must be funded using the SMSF's own cash (not the loan). Once the loan is repaid, there are no restrictions on renovation.
When you move to pension phase, you can either keep the property (rental income becomes tax-free), sell it (zero CGT in pension phase), or transfer it to yourself in-specie (complex — seek advice). The property must continue to comply with SMSF rules.
Yes — this is one of the most common structures. A couple can establish a two-member SMSF, roll over their combined super balances, and use the combined balance to purchase a property. Both must be trustees (or directors of the corporate trustee).
SMSF setup takes 2–4 weeks. Finance pre-approval typically takes 2–4 weeks. Bare trust setup 1–2 weeks. Settlement 30–90 days from exchange. Realistically, allow 3–4 months from starting the SMSF to settling on a property with a loan. Cash purchases can settle faster.