How To Set Up An Smsf For Using Super To Invest In Property

By Author: Rick Lopez
Total Articles: 284
Comment this article

Purpose and Fit

A self-managed super fund (SMSF) lets you direct your retirement savings. Property can be part of that plan when rules are followed. The aim is simple: build long-term income and growth inside super while keeping decisions in your control.

Check Eligibility and Roles

An SMSF can have up to six members. Each member is a trustee, or a director of a corporate trustee. Everyone must act for the sole purpose of providing retirement benefits and agree to the fund’s trust deed and duties. Learn how using super to invest in property can grow your future – visit the website today!

Choose ...
... the Trustee Structure

Decide between individual trustees and a corporate trustee. Corporate trustees often make member changes, death benefits, and property transactions simpler. Confirm the trust deed permits property, sets powers clearly, and outlines how decisions are made.

Register the Fund and Bank Setup

After execution of the trust deed, obtain a Tax File Number and an Australian Business Number with the ATO. Elect the fund to be regulated, then open a dedicated bank account. Keep all SMSF money and records separate from personal finances.

Draft the Investment Strategy

Document how the fund will meet its objectives. Address risk, returns, liquidity, insurance, and diversification. Explain why property fits, how rent and expenses will be managed, and whether the fund can meet costs and benefits when members retire.

Buying Property in the Fund

All investments must satisfy the sole purpose test. Residential property cannot be lived in or rented by members or relatives. Commercial property can be leased to related parties only at market terms. Always obtain an independent valuation and record decisions. Secure your financial future by buying a property with super – click to learn more!

Using Limited Recourse Borrowing

If the fund borrows, it must use a limited recourse borrowing arrangement (LRBA). Establish a bare trust that holds legal title, and ensure the loan is limited to the single acquirable asset. The lender’s rights are limited to that asset if the loan defaults.

Compliance and Ongoing Duties

Arrange an annual audit, lodge returns, and keep accurate minutes, valuations, and statements. Track contribution caps and pension rules. Review the strategy yearly and after major events. Seek qualified advice when dealing with complex lending or related-party leases.

Cash Flow, Liquidity, and Insurance

Property expenses arise before and after settlement: stamp duty, legal fees, inspections, loan costs, rates, strata, repairs, and insurance. Budget for vacancies. Keep enough cash or liquid assets to meet tax, admin, and pension obligations on time. Consider life and total and permanent disability cover if suitable, and also document it in the strategy. Plan exit options for sale or transition to pension phase.

Author Resource:-

Rick Lopez advises people about real estate, property investment, property management and affordable housing schemes.