Quick Notes on SMSF Property Investment

tax documents

tax documentsInvesting your hard-earned money is always going to be hard. You just never know if you are making the right decision. This is true when deciding what to do with the money you have in your super. One of the options that may appeal to you, as it has for many people of late, is the self-managed super fund or SMSF, which you can use to great advantage for property investment.

However, there are some things you should know when you mix one with the other.

SMSF Defined

The SMSF is a tax scheme regulated by the Australian Taxation Office or ATO. The only point of the SMSF is to supply you and other members with income for your retirement. It is a trust, basically, where the funds come out of your super, and the members are the beneficiaries. One way that an SMSF can generate income is to invest in property.


You will pay only 15% on your SMSF if you use it to buy property, which is much lower than the personal taxes you have to pay for income outside the SMSF. If you sell the property before retirement, you also get a discount on the capital gains tax and none at all after you retire.

Property Investment

You can choose to invest in any property, sentinelpg.com.au notes, if one of SMSF members or their relatives own it. However, if you buy a house, no member of the SMSF or relatives can live in it. This is why most people favour commercial property.

The rules allow members to rent it through their businesses as long as the lease terms are competitive, and paid in to the SMSF regularly. The ATO makes sure that the investment passes the sole purpose test, that is, to provide retirement income to members.

It seems then that SMSF property investment is the way to go. However, you should know that managing an SMSF is time-consuming and complicated. Unless you have the legal and financial skills to handle it properly, it may be a good idea to have a reliable property investment firm set it up and run it for you.