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

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

Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
Read more
February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
Read more
Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
Read more
Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
Read more
Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
Read more
Gillian Kearon
January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
Read more
Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
Read more
Karaipu Brown
December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
Read more
Chris Anderson
December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
Read more
Stephen Broomfield
December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
Read more
Tarek Hussain
December 6, 2023
Can't thank Amy enough for her hard work, dedication and determination on getting multiple loans completed for me. I wouldn't hesitate in recommending Amy and the Uno team to any of my associates. Will definitely be back in the near future!
Read more
November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
Read more