A comprehensive guide to buying investment property through your self-managed super fund — tax advantages, eligible assets, borrowing rules, and step-by-step process.
Last reviewed: April 2026 · By Turnkey Super
Yes — and it is one of the most compelling reasons Australians choose to establish a self-managed super fund. An SMSF can legally purchase direct residential and commercial property in Australia, giving you access to an asset class that retail and industry funds typically cannot offer at the individual level.
Under the Superannuation Industry (Supervision) Act 1993 (SIS Act), an SMSF trustee may invest in real property provided the investment is consistent with the fund's documented investment strategy, the property is purchased at market value, and it satisfies the "sole purpose test" — meaning the fund's assets exist for the sole purpose of providing retirement benefits to its members.
The key restriction is that you cannot use the property personally. Residential property held inside an SMSF cannot be occupied by you, your family, or any related party — even at market rent. Commercial property purchased by an SMSF may be leased to a related business on strict arm's-length terms, which is one reason business owners find SMSF property ownership particularly attractive.
Not all property is created equal under SMSF rules. The following categories are eligible:
Your fund's investment strategy must explicitly support the acquisition. A strategy that calls for balanced or diversified investing may need to be updated before a fund invests a large proportion of its assets in a single property.
Every SMSF investment must serve the sole purpose of providing retirement benefits to members. A property that doubles as a personal holiday home, for example, would breach this test regardless of how it is structured.
Buying property through an SMSF involves several layers of cost beyond the purchase price itself:
Costs are general and indicative only and may exclude GST. Refer to the Pricing page for further information on Turnkey Super's fees.
If your fund does not have sufficient cash to purchase a property outright, you can borrow through a Limited Recourse Borrowing Arrangement (LRBA). An LRBA allows your SMSF to take out a loan secured against a single investment asset, with the lender's recourse limited to that asset alone. This protects the rest of your fund's assets if the fund ever defaults.
LRBAs have their own specific legal requirements — including a separate bare trust structure and corporate trustee obligations — which are covered in detail in our dedicated guide.
Also read: SMSF Property Loans (LRBA Guide)Yes. An SMSF can purchase residential investment property, commercial property, and vacant land in Australia. The property must be acquired at market value, align with your fund's documented investment strategy, and comply with the sole purpose test — meaning it must be held for the sole purpose of providing retirement benefits to fund members.
No. Residential property held inside an SMSF cannot be used or occupied by you, your relatives, or any related party — even if market rent is paid. This is one of the most strictly enforced rules under the SIS Act. A breach can result in the fund being declared non-complying, triggering significant tax penalties. The rule has limited exceptions for commercial (business real) property leased to a related business on arm's-length terms.
Residential property generally cannot be acquired from a related party under any circumstances. Commercial property and business real property may be purchased from a related party, provided the transaction is at market value and conducted on arm's-length terms — i.e. the same price and conditions that would apply between unrelated parties. Independent valuation is strongly recommended.
A Limited Recourse Borrowing Arrangement (LRBA) is the legal structure that allows your SMSF to borrow money to purchase an asset. If your fund has sufficient cash to purchase a property outright, you do not need an LRBA. However, most members use an LRBA to leverage their super balance. Under an LRBA, the property is held in a separate bare trust until the loan is fully repaid, protecting the rest of your fund's assets from the lender's recourse.
SMSF property loans (LRBAs) typically require a deposit of 20–30% of the property purchase price, depending on the lender and property type. Residential property usually attracts a minimum 20% deposit (80% LVR), while commercial property may require 30–35% (65–70% LVR). The deposit must come from the existing cash and liquid assets of the SMSF — you cannot contribute additional funds from outside the fund specifically for the deposit without following standard contribution rules.
SMSFs can purchase residential investment property (houses, townhouses, apartments), commercial property (offices, warehouses, retail premises), and vacant land. They cannot purchase property that you or any related party intend to use or occupy (with the limited commercial exception noted above). The property must also satisfy the fund's investment strategy — for example, a fund whose strategy calls for diversification may need to justify concentrating its assets in a single property.
Related pages: Pricing · FAQs · SMSF Property Loans
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