Using Super to Buy Investment Property

Many people choose to purchase investment properties through their Self Managed Super Fund (SMSF) rather than their own personal bank account. However, Using Super to Buy Investment Property  important to understand the rules and costs involved before deciding on this type of strategy.

How can I make money with my super?

According to UNO Finance Broker Danny Buckingham, SMSFs can access investment property loans under a special borrowing arrangement called a Limited Recourse Borrowing Arrangement or LRBA. These arrangements have strict borrowing conditions. Typically, SMSFs can only invest in commercial or residential property that will generate rental income and cannot be lived in by the fund owner or their family.

There are also strict rules around buying and selling property within your SMSF. For example, SMSFs must purchase and sell properties at arm’s length, meaning you can’t buy from, sell to, or lease property to a family member. In addition, SMSFs must follow the Australian Taxation Office’s guidelines when it comes to property.

Purchasing property through your SMSF can be a good option for some people, but it’s important to consult with an accountant and/or financial adviser before making this decision. The adviser can help you determine if your SMSF is the right vehicle for your investment property goals, and they’ll also be able to assess whether borrowing in super is appropriate.

Be wary of property companies and advisers that offer referral fees for referring clients to them. This may create conflicts of interest and affect the advice you receive. To avoid these conflicts, only deal with licensed financial advisers (see ASIC Connect’s Professional Registers).