Can I use my super to buy property?
It’s a question we hear often at McMillans Accountants in Traralgon—and the answer is yes, you can use your superannuation to buy property, provided it’s done through a Self Managed Superannuation Fund (SMSF) and follows strict legal and tax requirements.
This strategy can be an effective way to grow your wealth for retirement while accessing the benefits of owning property—but it needs to be done carefully.
How Does Buying Property Through Super Work?
If you don’t have enough in your super fund to cover the full purchase price of a property, your SMSF can borrow the difference using a special type of loan called a limited recourse borrowing arrangement (LRBA).
Here’s how it works:
You set up an SMSF and transfer your existing super into the fund.
A separate trust is created to hold the property on behalf of the SMSF.
The SMSF contributes a deposit, and a loan covers the shortfall.
The property is rented out, and the rental income, along with regular super contributions, is used to make the loan repayments.
This strategy is available for both residential and commercial properties—though special rules apply if you’re looking to lease the property back to a business you own.
A Real-World Example
Let’s say Michelle and Simon want to invest in a $550,000 commercial property. While they don’t have enough cash outside super, Michelle has $100,000 and Simon has $220,000 sitting in separate employer super funds.
They decide to:
Set up an SMSF and roll over their super into it.
Use $200,000 of that super as a deposit.
Borrow the remaining $350,000 through a bank-approved limited recourse loan.
With steady rental income and their ongoing super contributions, they’re confident the SMSF can comfortably manage the loan repayments.
What Are the Benefits?
✔ Tax concessions: Rental income and capital gains earned inside the SMSF are taxed at concessional rates—typically much lower than personal income tax.
✔ Long-term wealth building: Property offers potential for growth and steady income in retirement.
✔ Control: An SMSF gives you control over your investment decisions and retirement savings.
What You Need to Know First
Before you make a move, it’s essential to get tailored advice. SMSF borrowing is complex, and the ATO has strict rules. If not structured correctly, you could face:
Severe tax penalties
Legal complications
An invalid investment that can’t be held by the SMSF
At McMillans, we’ll help you:
Understand your borrowing capacity
Structure your SMSF and trust correctly
Assess the cash flow and risk
Ensure full ATO compliance
Let’s Talk Before You Borrow Through Super
If you're curious about using your super to invest in property, let’s sit down and explore whether this strategy is right for you.