LODGEYGLOSSARY
StructureSMSF

SMSF Property Investment

Buy property inside your self-managed super fund — with strict borrowing and compliance rules.

Definition

A Self-Managed Super Fund (SMSF) can invest in residential or commercial property, including using a Limited Recourse Borrowing Arrangement (LRBA) to leverage the purchase. The property must meet the 'sole purpose test' — it exists purely to provide retirement benefits for members. Members cannot live in the property or rent it from the fund. Commercial property can be leased to a member's business. SMSF compliance is governed by the ATO and ASIC.

WHY IT MATTERS

SMSF property investment offers a 15% tax rate on rental income (vs up to 45% for individuals), a 10% CGT rate if held 12+ months, and zero tax in pension phase. However, the compliance burden is significant: annual audits, actuarial certificates, investment strategy documentation, and strict borrowing rules. Getting it wrong can result in the fund being made non-compliant and taxed at 45%.

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