Using super to buy property
Published
June 24, 2020
Published
June 24, 2020
Information current as at August 2025. Always check the ATO for updates and seek personal advice from a licensed adviser.
Property is a staple investment for many Australians. Real estate investment can promise stable yields, strong capital growth and tax advantages, especially if you use super to buy an investment property.
Can I use super to buy property?
Yes, you can use super to buy a property. But you cannot use a standard industry or retail super fund to directly purchase a property yourself. These funds may invest in property indirectly through managed funds or REITs, but to purchase an individual property you need to set up an SMSF.
An SMSF is a private super fund that you manage yourself, which is why you might hear it called DIY super fund.
What type of property can I buy in my super?
You can purchase commercial or residential property using your super. But because your SMSF is designed for investments, like a commercial property investment or residential property investment, you cannot live in the property.
There is no legislated minimum or maximum property value for an SMSF. However, trustees must ensure any property purchase fits the fund’s investment strategy and liquidity requirements.
What are the benefits of using superannuation to buy property?
Strangers to SMSF property investment will be happy to see the range of benefits from using an SMSF to invest in property. If you use super to buy an investment property you could potentially see a few positives (there is no guarantee this applies to everyone – consult your financial adviser before setting up or investing with an SMSF):
Tax advantages
If your SMSF is in accumulation phase, CGT on eligible assets held more than 12 months is generally capped at an effective 10 per cent after the one-third discount. In retirement phase, earnings and gains on assets supporting an income stream can be exempt, subject to transfer balance cap rules.
Interest and many property expenses can be deductible to your SMSF where they are incurred in deriving assessable income. Apportionment rules apply if part of the fund is in retirement phase.
Pay loan off quicker
With rental income and contributions from your super, you might be able to pay off your loan quicker than you would without these income streams.
Pay yourself rent
If you own a business, you may be able to be your own tenant by buying a commercial property in your super and moving your business into the premises.
Rent can be paid from your business (the tenant) to your SMSF (the landlord).
Strengthen retirement income
Your SMSF captures all income and capital gains from the property investment in your super.
Also, if there is no loan on the property your SMSF owns, you can use rental income to fund your pension account. This investment income might be tax exempt, and is called Exempt Current Pension Income (ECPI).
Limited Recourse
Should your property investment go awry, the bank is unlikely able to hunt down your home, car or personal savings to repay the loan. This Limited Recourse Borrowing Arrangement (LBRA) is why some people use super to buy an investment property.
Can I take out a property loan in my super?
Yes, you can take out a loan in your super to purchase property as long as your SMSF trust deed permits it (and you are able to gain approval from your financier).
Of course, consult your accountant or financial planner to determine whether you should take out a loan under your super. Your financial adviser may outline the below benefits of taking out a property loan in your super:
Limited Recourse Borrowing Arrangement
Borrowing in your super to purchase property is called a Limited Recourse Borrowing Arrangement (LBRA). This is when an SMSF trustee takes out a loan from a third party lender, like a bank, and uses the money to buy property in a separate trust.
Under LBRA, also known as a non-recourse loan, is that if the borrower defaults or can’t repay the loan, the lender can typically only use assets in the separate trust to repay the debt. The lender usually cannot go after the borrower’s personal assets, like their car, personal savings or home, to repay the property debt.
Borrow in your super for the right kind of investment
If you’re looking to take out a loan in your super to purchase a property, you should consider whether it’s the right kind investment for your SMSF. If your’e unsure, consult your financial advisor first.
SMSFs can be expensive to set up, so you might want to find an investment with strong income to outweigh the expenses.
This is why many investors turn to SMSF commercial property investment: If you’re able to invest in a commercial property offering high yields, this will often offset (or heavily reduce) the costly burden of setting up a Self Managed Super Fund.
Recent changes
From 1 July 2025, a new measure known as Division 296 will apply an additional 15 per cent tax on certain superannuation earnings for members with total super balances above $3 million. This effectively increases the tax rate from 15 per cent to 30 per cent on the portion of earnings attributable to balances above the $3 million threshold. Balances under $3 million continue to be taxed under the current rules.
Can I invest in an unlisted property fund using super?
SMSFs might be an effective investment vehicle to shelter investment earnings and profit from tax obligations, especially if investing in an unlisted property fund.
We are of course not tax consultants so ensure you talk to your accountant before ensuring its the right investment vehicle for you.
An unlisted property fund, also known as an unlisted property trust or commercial property syndicate, pools money from different investors in order to buy commercial real estate with a high price tag.
As long as an unlisted property fund meets the criteria of the Superannuation Industry (Supervision) Act 1993, you might be able to capitalise on tax effective cash flows and capital growth by using your super to invest.
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