Out of all the different super funds that are available to Australians today, the self-managed super fund (SMSF) is an especially important option that’s lauded for its flexibility and usefulness.

As one of the most accessible and effective solutions for saving up for retirement, the SMSF is regarded by experts as a more hands-on option that can be very advantageous with the right approach. However, holders of this type of fund are also entrusted with the responsibility of handling other tasks such as complying with super and tax laws.

If you’re wondering how you can use these kinds of funds, the possibilities are limitless. SMSFs can be used to purchase investment vehicles such as stocks, bonds, mutual funds, and the like. However, recent trends in Australia’s laws on superannuations have made way for deviations from the standard approach. One such example is purchasing property.

What You Should Know About SMSFs and Property

If you’re intent on using your self-managed super fund to purchase property, there are various rules and conditions you need to be aware of. Fortunately, complying and ensuring a smooth process isn’t very difficult, especially when the right approach is taken from the get-go. 

Read on for a rundown of all the factors you need to tackle when shopping for a new home with your SMSF: 

ATO Guidelines

The Australian Taxation Office (ATO) currently upholds a few key rules for those looking to purchase property with their SMSFs. These guidelines are fairly easy to follow and cover most—if not all—of the legalities and details that will ensure a smooth and legal transaction.

Here are the ATO’s current rules: 

  • The property must meet the “sole purpose test”—an assessment whose objective is to gauge a property’s ability to solely provide retirement benefits to fund members;
  • The property purchased using the fund must not be from a related party of a fund member;
  • A fund member or any related parties of a fund member cannot live in or rent the purchased property;
  • If a commercial property is being purchased using an SMSF, it can be leased to a fund member or related parties for their business. This condition applies as long as it is used for business purposes, considering it is leased at the market rate and the arrangement follows specific rules.

Obtaining a Home Loan Using An SMSF

Compared to traditional property transactions, applying for a home loan with your SMSF bears a unique set-up as aspiring buyers are subject to strict borrowing conditions. 

For starters, all SMSF home loans require a limited recourse borrowing arrangement (LRBA). This helps limit the recourse of a lender because it establishes a separate property trust and trustee on behalf of the super fund outside of the SMSF structure. 

Every income and expense transaction goes through the super fund’s bank account, and the super fund must meet all loan repayments. Should a super fund fail to do this, the lender only has the property held in the separate trust as recourse, which renders any remaining assets inaccessible.

If you’re keen on purchasing a property with your self-managed super fund, it’s ideal to enlist the help of a professional such as Wealthy You so they can guide you through the process.


Purchasing a home can be done in many different ways, but doing so through the help of a self-managed super fund is a particularly advantageous route worth considering. Through the help of this guide and the key points mentioned above, you can ensure that you take the proper steps moving forward and secure your ideal property ASAP.

Are you looking to capitalise on the advantages of self-managed super funds in Sydney with the help of a professional financial advisor? We've got you covered. Get in touch with Wealthy You today!