SMSFs and property

Understand how property investment through a self-managed super fund (SMSF) works, and key things to consider.

Self-managed super fund property rules

According to the Australian Taxation Office (ATO), there were over 653,000 SMSFs at 31 December 2025, with more than $1 trillion in assets. Of this, around 17.5% of SMSF assets are held in residential and commercial property.

You can only buy property through your SMSF if you comply with the rules.

The property must:

check_box meet the 'sole purpose test' of solely providing retirement benefits to fund members

check_box not be acquired from a related party of a member (related parties include relatives, business partners and others)

check_box not be lived in or rented by a fund member or a related party of a member

And if the property is a business premises:

check_box the premises can be leased to a fund member, but you must follow specific rules and lease the property at market rates.

The ATO has more information about SMSF investment restrictions.

What an SMSF property can cost you

Buying property through an SMSF involves upfront and ongoing costs.

Costs can include:

• advice fees, charged upfront or on an ongoing basis
• initial setup costs, such as legal fees, SMSF establishment costs and stamp duty
• ongoing SMSF costs, including accounting, audit, ASIC and ATO fees
• ongoing property costs, including rates, management, maintenance and insurance
• loan costs, such as interest and bank fees
• additional life insurance costs, if the SMSF is borrowing to purchase a property.

These costs often come from your super and reduce your overall balance.

The SMSF may also bear additional costs if there are significant changes to the investments held, or the arrangement is wound up. For example, if the SMSF needs to sell a property to fund a large withdrawal, such as a death benefit.

When getting advice about an SMSF, make sure it comes from a registered financial adviser. Anyone who gives advice on an SMSF must hold an Australian financial services (AFS) licence or be authorised by an AFS licensee.

ASIC’s Financial Advisers Register will tell you if the person is a registered financial adviser, who they are authorised by, what product areas they are authorised to advise on, their qualifications and training, and more.

Be cautious when advisers recommend each others’ services. It's possible that commissions or referral fees are paid to people involved in the transaction (like property developers or real estate agents). Referral fees can create conflicts of interest and influence advice. 

See property investment for more information.

SMSF borrowing to purchase property

Borrowing or gearing to buy property through an SMSF must follow strict rules. This type of borrowing is called a limited recourse borrowing arrangement.

Under this type of arrangement, an SMSF can only purchase a single asset, such as one residential or commercial property. 

You should consider whether borrowing to invest in property suits the investment strategy and risk profile of your SMSF.

Borrowing adds complexity. Getting advice from a registered financial adviser can help to understand the risks involved.

SMSF leveraged property risks include:

report Higher costs – SMSF property loans often have higher interest rates and fees than other loans, and SMSFs that invest in property may face higher ongoing administration costs (for example, accounting and auditing). They may also require a holding trust to be established. The added risks and complexity can also increase the need for financial advice and administration assistance.

report Cash flow pressure – Your SMSF must meet loan repayments and property expenses, possibly while also funding pension payments or other withdrawals in the future. You may also need to sell the property to fund a large withdrawal, such as a death benefit.

report Loan repayment risk – You need to plan how you’ll service or repay the loan if the property is vacant or if members cease making contributions due to loss of employment, illness, injury or death.

report Hard to cancel – If the loan or property documents aren't set up correctly, you may not be able to alter them or easily unwind the arrangement. So, you may have to sell the property instead, potentially triggering substantial losses.

report Tax limits – Tax losses cannot be offset against income outside the SMSF.

report No major alterations – You cannot change the character of the property until the loan is repaid.

See borrowing to invest for more information on the risks of gearing.

Property developers and SMSFs

Property developers must hold an AFS licence if they provide financial advice. This includes advice aboutn setting up an SMSF.

Property developers may have business relationships with professionals they recommended. They may receive referral fees or other benefits that could amount to thousands of dollars.

Be cautious if you feel pressured to by property through an SMSF. Watch out for sales tactics such as competitions, free flights to sales meetings or free meals.

Think carefully before investing in property markets you are not familiar with. Do your own research first.

Still got questions? The ATO’s SMSF education modules can help you to navigate starting, running and winding up a SMSF, and support you as a trustee with your regulatory obligations.