Managing Super Funds For Property Investment

With lending becoming more accessible and more competitive rates available, more Australians are opting to pour their SMSFs into property. According to recent figures from the ATO, SMSF allocations for residential property rose by 26.4% between the June quarters of 2021 and 2024.

And if you’re just getting started on your SMSF property investment journey, we’ve created a step-by-step guide to help you stay on track.

1. Ensure your SMSF is set up properly

Before you can invest in property, your SMSF must be legally established and comply with ATO regulations. This includes having a trustee structure, a bank account and an investment strategy that allows property purchases.

2. Create or review your investment strategy

Your SMSF’s investment strategy must reflect your intention to invest in property and demonstrate that it aligns with your retirement goals. Your SMSF auditor will review this document, so it must be clear and compliant.

3. Understand what property you can buy

SMSFs can purchase residential or commercial property, but there are strict rules. The property must be for investment purposes only and cannot be lived in or rented by fund members or their relatives.

4. Finance the purchase with a Limited Recourse Borrowing Arrangement (LRBA)

If your SMSF doesn’t have enough cash to buy the property outright, you’ll need an LRBA, a special type of loan where the lender’s rights are limited to the property purchased, protecting the rest of your fund’s assets. As these loans aren’t listed as your standard mortgage, engaging with a professional who specialises in this area is highly recommended.

5. Consider ongoing costs and responsibilities

Like any other type of property purchase, managing a property through an SMSF also includes ongoing maintenance, rental management, insurance and compliance checks. Review your savings and budget to ensure your SMSF can handle the ongoing financial and administrative responsibilities.

6. Engage experts at every step to keep things compliance

This is not the kind of investment you should go into alone. A property investment advisor, SMSF accountant and financial planner can help you navigate the legal and financial requirements with confidence. And if you’re looking for a seasoned team to kickstart your journey, look no further than My Castle My Home.