Buying investment property with SMSF

UNO's guide to SMSF investment properties

Guide to using your super to buy a house, including SMSF investment property

Chances are you’ve thought of buying - or maybe even know someone who owns - a smsf investment property

If you’re looking to buy a house to live in with your super, your options are pretty limited. However, for those seeking to invest in property through their super, it is certainly possible.

But how do super property investments work, and are they worth it? Here’s everything you need to know about using your superannuation to buy a home.

Using SMSF super to buy an investment property

You can use your super to buy commercial or residential property through a self-managed super fund (SMSF), but you won’t be able to live in it.

Investing in commercial or residential property through Self Managed Super Funds (SMSF) is increasingly popular.

An estimated 1.1 million Australians have Self Managed Super Funds (SMSF) worth $820 billion - around a quarter of all super assets in the country.

UNO finance broker Danny Buckingham said SMSFs can access finance—also known as a Limited Recourse Borrowing Arrangement or LRBA—to fund property investment.

“UNO has access to SMSF loans with multiple lenders. These products typically require a Loan to Value Ratio (LVR) of 70-80 per cent and require you to have a decent buffer in your fund.”

“SMSF investments homes are much like normal super. They need to generate rental income and can’t be lived in by fund owners or relatives - it can’t be a holiday home and you can’t have a family member living there.

“It’s important to note you can’t use equity from an existing property. You need a decent fund balance with a contribution record,” Danny said.

Property acquired with SMSF must be held to provide retirement benefits to fund members and not be lived in, acquired by, or rented to your family.

Like any investment, SMSFs property investments require research and come with ample risks. Hence, investing in property with your super could either help or hinder you during retirement.

“You need to talk to your financial planner and make sure it is a suitable road to go down before making any decision,” said Danny.

Thinking about a SMSF investment property? Have a chat with Danny today.

What is a SMSF?

A self managed super fund (SMSF) is a superannuation (retirement savings) account that you manage yourself. They are different from industry and retail super funds which are managed for you.

With a SMSF, you can decide how your money is invested. Any returns made are taxed at 15%.

Having control over your retirement is appealing - you could even use a SMSF to buy property. But there is lots of work and risk involved.

To begin, you’ll need to establish a trust/trust deed, register with the ATO, and form investment and wind-down strategies. Professionals like financial and tax advisors are required for most of these steps.

SMSF can have up to six members, who are all trustees of the fund. Trustees are responsible for running the fund with member benefits in mind and are liable for super and tax laws.

Pros and cons of using your super to invest in property

One drawback of SMSFs is the administration involved. Establishing and running a fund isn’t simple; you’ll be liable for record-keeping, financial reporting, and the possibility of auditing.

Next, a super fund invested primarily in property lacks diversification and is, therefore, potentially less intolerant to risk.

However, SMSF are appealing to those seeking to control how their retirements are funded and are tax-effective.

Investing in property also has tax advantages (within the fund). While SMSF rental income is taxed at 15%, mortgage repayments are tax deductible.

Read more: How to reduce CGT on an investment property

Unlike on most other investment properties, capital gains or rental income is not taxable once a beneficiary retires.

Is property a good investment option for SMSF?

Investing in SMSF property can be appealing as it adds a property to your portfolio without impacting your finances upfront.

Property values have increased by an average of 6.8% annually over the past 25 years.

Super fund performance varies depending on the fund and portfolio. Australian Super’s Balanced option, for example, has a 10-year annualised return of 9.3%. Of course, funds charge fees which should also be considered.

All investments have upsides and risks. It is important to consider these and whether they are right for you by speaking to a financial advisor.

How much deposit do you need for a SMSF property?

SMSF properties typically require a LVR (loan-to-value-ratio) of 70-80 per cent. That’s a $150,000 (20%) to $240,000 (30%) deposit on a property worth $800,000.

You will also need money set aside (generally around 5%) to cover other fees and charges like stamp duty and professional fees like conveyancers.

Commercial property investment requires a higher deposit with a LVR of 30%.

How much super do I need to buy an investment property?

There is no hard and fast rule, but UNO broker Danny Buckingham says a balance of “a few hundred thousand” generally does the trick. Funds require a history of regular contributions.

Using super to buy a house to live in

Can I use my super to buy a house?

You cannot use your super to buy a house to live in. Although, eligible first home buyers can access up to $50,000 in voluntary (non-employer) contributions towards a house deposit.

Under the First Home Super Saver (FHSS) Scheme, eligible first home buyers can withdraw from their super to buy a house, provided:

  • They’re 18 or older
  • You have not owned a property before
  • You live in the property for at least six months

Red UNO's ultimate guide to FHSS here

Can I use my super as a house deposit?

Eligible First homebuyers can use their super under the FHSS scheme. It is also possible to use your existing super as a deposit for an investment property through a self-managed super fund.

Disclaimer: Advice in this article is general in nature and does not constitute financial advice. Always seek professional advice that considers your individual circumstances when making financial decisions.

Book Call Now

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles


What our customers are saying

Marlon Baena
July 22, 2024
Karis dedication to assisting with our home loan, even while I was on holidays, truly exemplifies a commitment to excellent service. It's the small things that often make a big difference, and it seems Karis attention to detail and clear communication were key to our smooth home purchase. I highly recommend using UNO and Karis for your home loan needs.
Read more
Olivia Gill
July 18, 2024
We recently used UNO Home Loans to assist us with securing our new mortgage in AU (had moved here from NZ). We had Michael Parsons as our mortgage broker and he was extremely responsive and helpful the whole way through the process. Was a great experience and definitely recommend :)
Read more
Yash Karma
July 18, 2024
Andrew Wyers and team have been amazing. Andrew is very knowledgeable, offers practical advice and he has been pivotal in helping me secure a mortgage at a very competitive interest rate. He was highly responsive to my queries and,being a new immigrant to Perth, he was very patient with my many many questions. An added benefit for me was his knowledge of how superannuation here works. A hec of a great guy to work with, reliable and he goes above and beyond. I would recommend highly recommended him, especially for new immigrants. In fact, I will be using him again very soon!
Read more
Rosie Deiath
July 2, 2024
Karis from UNO was so supportive throughout the entire process of buying our first home. She was contactable at any time, and answered all our silly questions for us. We couldn't recommend Karis and her team enough, as it always felt like she was in our corner with our best interests at heart.
Read more
Jack Mikkelsen
July 2, 2024
We dealt with Karis Churchill as the mortgage broker for our first home. Karis was so supportive and knowledgeable through the whole process! A+ mortgage broker. Definitely utilise her expertise if you’re buying a house!
Read more
Kapil Baldota
June 25, 2024
Eren Tan is absolutely one of the best mortgage brokers in Melbourne! Keeping us well informed throughout the process. Eren gave us a helpful hand in managing to get our loan over the line in a quick and efficient way which is what we wanted and he delivered on that. Thank you Eren Tan!
Read more
June 21, 2024
I only have praise from my Uno experience! I was a broker sceptic, having done all of the hard work myself for my first two property purchases and sale. I'm now a proud broker advocate having used UNO (Karis Churchill) for two refinances and purchase. The value add Karis brought cannot be underrated! Not only has Karis got me the best rate, with a bonus cash back (nearly unheard of in this climate), she has done it with the least back-a-forth and with the least administrative burden on me (the thing that can deters people from refinancing to begin with). Karis is always on top of everything. Karis knows her stuff. She is the most responsive of any professional service provider I've ever used (my banker never text with an update at 7pm on a Sunday) without being overbearing. You know she's got your back and in my experience the value speaks for itself. Thank you to the whole UNO team, thank you especially to Karis.
Read more
Leanda Cawdry
June 8, 2024
Very pleased with the outcome of this process, Michael Parsons and his team at UNO were helpful, communicative, and took all the stress out of the process of finding me a refinance deal that met my needs. Would definitely recommend Michael and UNO, and I already have!
Read more
Glen Matthews
May 29, 2024
Regarding UNO Home Loan services. I had great experience with uno home loans, Michael parsons was my broker for UNO Home Loans we had excellent communication throughout the whole home loan application. If I had any questions on home loan application which were many were answered in great detail. He had the time to assist me in filling out endless application forms at anytime through the day or night which made the application process stress free. So I would strongly recommend Michael parsons from UNO Home Loans to try his services you will not be disappointed. Thanks to Michael parsons I have the lowest home loan interest rate I could ever hope for which I particularly ask for. It’s was a pleasure working with him. And will be using his services in the near future.
Read more
Gillian Anderson
May 28, 2024
Thank you to Michael and UNO for their help in securing our home loan. I like the way they break everything down in simple terms to ensure that you can make the right decision. Michael was polite and very patient to help us get things across the line. We are now sitting in our first home away from rental circus. Can't recommend them enough. Thanks Michael and thanks UNO
Read more
Andy Song
May 17, 2024
Amy has been absolutely wonderful as a broker. I would not hesitate one bit in recommending her services.
Read more
Troy H
May 13, 2024
Scott Wilkinson did a great job as my broker. He was very patient and always happy to answer my numerous questions throughout the considerable period of time that it took to secure a suitable property. Would certainly recommend Scott and the team at UNO for anyone seeking a broker.
Read more