Buying Property Using Your Super

by Ben Handler

February 5, 2021

Buying Residential Property Using Your Super

Are you looking to make your super work harder for you and to invest in property to make long term gains? You’ve come to the right place. 

With property presenting the opportunity for high growth returns, more and more investors are setting up self-managed super funds (SMSF) to invest in residential and commercial property. Here are some key tips to take into account before embarking on this exciting investment journey. 

You Need a Self-Managed Super Fund 

Unfortunately you can’t just use your super to buy property. Only a self-managed super fund will allow you to directly purchase a residential or commercial property. Your industry super may give you indirect exposure to property via your investment portfolio strategy, however, this is done by your funds own allocation of shares. 

Setting up a self-managed super fund is a big decision that can require a significant investment of time and money. So you need to think carefully about whether this is a path that you want to go down. Your self-managed super fund can have up to four members, and as a member you are a trustee of the fund making you responsible for fund decisions and complying with the law. 

You’ll also need to meet a number of regulatory checks such as the ‘sole purpose test’ which highlights that any purchase of property must be made to provide retirement returns to members of the SMSF. The Australian Taxation Office has a handy guide where you can learn more about what’s required when setting up a self-managed super fund

Get Professional Advice From An Expert 


It’s highly recommended that you engage with an expert (or multiple experts, if needed) to give you financial and legal advice on setting up a SMSF so that you’re fully aware of everything that’s involved. This advice and guidance can be crucial in avoiding any expensive headaches further down the line. You can’t put a cost on peace of mind. 

The Differences Between Buying Residential & Commercial Property When Using Your SMSF 

Not all property works the same way under a SMSF. In deciding whether to buy a residential or commercial property, you’ll need to take into account a number of considerations for each. 

Residential Property 

If you’re looking to buy a residential property using your SMSF then you need to know that this property cannot be lived in by any of the trustees or anyone related to a trustee. It also cannot be rented by any of the trustees or anyone related to a trustee. If you own an existing residential property, your SMSF cannot buy this from any of the trustees or anyone related to a trustee. 

If you do not have the full funds available to purchase a residential property using your SMSF, your SMSF can borrow money via a loan. However, it’s worth noting that the lending criteria can drastically differ from your typical loan, based on the risk presented to the financial institution. 

Commercial Property 

Unlike investing in residential property, there can be more flexibility when acquiring commercial property using your SMSF. Commercial properties can be sold and leased to SMSF members.

This can present a number of benefits for businesses. 

A small business may adopt a strategy where they purchase a business premise using their SMSF and then pay rent directly to the SMSF. As mentioned above, it’s important to get the right advice, as rent would need to be paid in a timely fashion and at a market rate. 

While a premise may look attractive to a business as part of a SMSF, the purchase needs to comply with the overarching goals of the SMSF which is to provide retirement returns to the trustees. If there’s limited growth expected for a property, then it may need to be reconsidered. 

As with residential property, acquiring a loan via your SMSF to fund the purchase of a commercial property will result in tighter lending criteria. 

Work with a Buyer’s Agent 

Once you’ve decided to purchase property using your SMSF, working with a buyer’s agent (also known as a buyer’s advocate) to secure your dream property can save you time, money and give you access to a range of properties you might not have known existed. Buyer’s agents work with a range of clients everyday (including many of those who are using a SMSF), buying residential and commercial property, and will be in a great position to help you secure a property that is going to meet investment criteria. Their expert guidance will ensure the process is as easy and carefree as possible.

Use our handy guide to find the right buyer’s agent for you

Become an Expert Yourself

Do you have a keen interest in learning more about property? Or maybe you’re considering a career change? Consider a career in property buying. This is a fantastic opportunity to build new relationships in real estate, help yourself and others achieve their property goals and find a career that you love.

Get in touch with our friendly team or watch our free webclass to learn more.

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