Things you should know about SMSF property investments

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Buying investment properties has become increasingly common during the last couple of years. In 2007, the law in Australia allowed people to purchase investment properties through their self managed super funds which has made property investing even more popular.

As these purchases imply a wide range of complex and overall complicated features, everything should be carried out attentively, to make everything according to the law. Now, let’s get acquainted with the main advantages that come with SMSF property investments.


To begin with, the fundamental advantage of SMSF property investments is control. Such an investment allows you to regulate where you wish your retirement fund to be invested. For instance, when it comes to industry super funds, they aim at investing your finances in a range of different investments that are equally suitable and profitable. In this view, you should know that your personal finances can vary by the type of assets your particular fund is invested in. Consequently, you may consider choosing which properties you wish to invest in while having the opportunity to alter your portfolio as you please.

A 15 percent tax

Before retiring, you will be required to pay an appreciative tax of 15 percent out of your total gain. Additionally, if you keep the property for longer than 12 months, you may benefit from a 10 percent tax, that means a 5 percent tax decrease.

Zero tax after retirement

If you succeed in maintaining your property after retiring, another significant benefit is that you won’t be required to pay any taxes in case you decide to sell or rent the property.

While the enumerated advantages might be convincing, still there is a wide range of possible pitfalls that shouldn't be omitted. Let’s take a look.

Your tenants cannot be friends or relatives

You cannot rent your SMFS property to any of your relatives or friends. In this view, your property should be arm length

You are not allowed to make major renovations

If you’re thinking about renovating your SMFS property, you should think twice. This particular aspect is not allowed. Only small repairs are approved. You cannot make major renovation and additional property enhancements.

Pricey and complex establishment

The main drawback to an SMSF property is that its set-up process is utterly pricey and complex. You will undoubtedly necessitate the assistance of a professional. In this view, figuring loans with your bank, or perhaps considering the help of a financial advisor will aid you to compare and contrast the most favorable home loan rates. Besides the fact that you will require professional help, in worse case scenario your set-up forms don’t meet the law’s requirements, there is a wide range of severe penalties. Multiple forms and checks need to be thoroughly analysed. So, you don’t afford to make any mistake.

Consequently, make sure you get acquainted with every detail concerning the complicated procedure before proceeding to adapt your super into a self-managed fund.

Easily compare home loan options today

We compare home loan options for you so you can be assured you’re seeing the most competitive interest rates available in Australia.