The Pros & Cons of Buying a Property in a SMSF

By Shane | Uncategorized

Mar 02

There’s an increasing number of Australian investors who have taken control of their super fund and are utilising them to purchase property investments. Self-Managed Super Funds (or SMSFs for short) have become the single biggest asset class in Australia. But before going in-depth with the advantages and disadvantages of borrowing with a SMSF, you should first understand SMSFs.

Understanding Self-Managed Super Funds

A Self-Managed Super Fund is a fund established by one to four individuals for the sole purpose of providing retirement benefits. While SMSFs has the same rewarding financial benefits and concessions as retail, corporate or industry super funds, the significant difference and the main attraction for most people is the ability of the members to take personal control of the assets invested.

The trustees are responsible of the investment decisions because they have the ability to come up with a range of financial strategies intended to meet the specific needs of each member, and they are held accountable in revising these approaches as circumstances change. The members, who are also trustees of the fund, have full control over the investment which includes being responsible for all investment decisions. As a member, you’re privileged to respond assertively should an investment opportunity arises.


  • Before retirement, capital gains and rent earned by your SMSF are taxed at only 15 per cent.
  • You have direct control of your super investments and the diversification in your portfolios.
  • If you use your SMSF to buy a property and hold it until after you retire, you’ll pay no tax on the capital gains if you sell or on the rent if you continue to own it.


  • You can’t live in the property and neither can family members.
  • You can’t use the property you invested as a holiday home for it should be exclusively purchased for investment purposes only.
  • Renovating a property purchased through a SMSF is not allowed, while there is money borrowed against it.
  • There are costs involved to set up a SMSF and there can also be higher fees involved in getting a loan through your SMSF.
  • Running your SMSF can be complicated, but you can use a professional to run it to ensure you are fully compliant with the rules and regulations. 

In Summary…

If you’re knowledgeable and you consider yourself as an expert in investing, a SMSF could be a good option for you because you’re already experienced when it comes to managing your time and your own investments. You’ll also have the advantage in fixed costs, unlike a retail fund which charges fees as a percentage of the value of your portfolio. On the other hand, running a SMSF is undoubtedly complicated and time consuming. Furthermore, it is very important that you’ve gain expertise about investments because you’ll need to create and document your fund’s investment strategy, take note of your investments and transactions and record them, and confirm that your fund is sufficiently diversified to help you manage the risks of investing.


Author: Shane

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