Property in SMSF

Ever thought of investing your superannuation in real estate?

You can invest in real estate directly through your SMSF. Investments can be made in both residential and commercial property.

A SMSF can purchase a residential property. There are certain restrictions on acquiring property from a person or entity related to a trustee or member of the SMSF. There are also restrictions on leasing the property to a person or entity related to a trustee or member of the SMSF. A SMSF cannot purchase a residential property from a member of the SMSF or a related party, and cannot lease the residential property to a member of the SMSF or a related party.

A SMSF may purchase a property off the plan.

Commercial property can be purchased at market value from a member of the SMSF or related party and can be leased to a business related to a member on commercial terms, including the amount and frequency of rent payment.

This may be an attractive option for business owners:

• who currently owns or another related entity owns a real property that they run their business from to 'sell' the property to their SMSF. This allows for the business owners to 'cash out' their property, but still own it within their SMSF. The SMSF will lease the property to their business. There may be capital gains tax concessions and/or stamp duties concessions on the transfer of the property to the SMSF.
• to purchase a real property to run their business from. The SMSF will lease the property to their business.

A SMSF may borrow to fund the purchase a real property - residential and commercial property. The correct structure will need to be in place prior to entering any agreement to purchase. See Limited recourse borrowing arrangement.