Property investment through a Self-Managed Super Fund (SMSF) is a growing strategy among Australians seeking to take control of their retirement planning. It also comes with regulatory obligations that require a high level of due diligence. Before purchasing property through your SMSF, it is important to understand the compliance requirements and lending conditions that apply.
SMSFs are increasing their exposure to real property
Australia has more than 600,000 SMSFs with over 1.1 million members. These funds hold approximately $139 billion in residential and commercial property, highlighting the strong appetite for tangible, long-term assets within retirement portfolios.
Source: ATO SMSF Quarterly Statistics, March 2025
Borrowing through an SMSF requires specialist structuring
SMSFs can only borrow through a Limited Recourse Borrowing Arrangement (LRBA), which protects the fund’s other assets. These loans usually require a minimum deposit of 20 to 40 percent. Not all lenders offer SMSF loans, and those that do apply strict criteria. A broker experienced in SMSF lending can guide trustees through product selection and structure.
Compliance is essential to avoid penalties
In 2024, the ATO reported over 3,500 SMSF auditor contravention notices. Many of these breaches involved property-related compliance failures. Working with qualified professionals across lending, legal, and accounting functions is essential to meet ATO expectations. (Source: ATO SMSF Annual Report, 2024)
Properties must pass the sole purpose test
Trustees must ensure that the property is used only to generate retirement benefits for members. No related party can live in or use the property. Even temporary or unintentional use may result in a compliance breach.
Property strategy must align with fund goals
Property within an SMSF must suit the fund’s overall retirement strategy. Considerations include liquidity for pension payments, diversification of assets, and the fund’s ability to meet loan repayments without breaching contribution caps or early release rules.
We are experts, and we are here to help
Loan Lounge provides SMSF lending services in coordination with your accountant, adviser, and legal representative. We help trustees implement a compliant, tax-efficient lending structure to support long-term wealth creation.
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Book a confidential SMSF lending consultation today.