Plan and Prosper: SMSF Real‑Estate Investment Roadmap

Recent SMSF Education Seminar

Over the past two decades, Self-Managed Super Funds (SMSFs) have become an increasingly powerful vehicle for property investment in Australia. What’s driving this shift? Four major factors: tangible assets, control, reliable returns, and significant tax perks.

Brick‑and‑Mortar Appeal

Property feels real—unlike shares, it's something you can touch and understand. Inside an SMSF, direct ownership often yields dependable rental income and potential long-term capital gains—key for those chasing a stable retirement income. It’s no surprise trustees* prefer property for predictability.

Tax‑Friendly Framework with an SMSF

SMSFs enjoy some serious tax advantages:

• Rental income is taxed at 15% during the accumulation phase—far below top personal rates.

• Held for at least 12 months? You benefit from a CGT discount, dropping the effective rate to 10%.

• Enter the pension phase and rental income or capital gains can be entirely tax-free.

These concessions make SMSF property investment significantly more tax-efficient than personal ownership.

Residential vs Commercial: Pros and Cons

Feature	Residential	Commercial
Yields	~2–5 %	~5–8 %+
Lease terms	Short-term, higher tenant turnover	Longer leases (3–10 years), more stability
Outgoings	Landlord covers most costs	Tenant often handles insurance, rates, etc.
Risk	Diversifies tenant types	Vacancy risk if tenant leaves
Unique perk	Broad familiarity	Can lease to your own business (arm’s length)

Commercial properties often deliver better yields and less landlord maintenance—but require deeper due diligence.

Leverage with LRBAs

Using Limited Recourse Borrowing Arrangements (LRBAs), SMSFs can borrow to buy property—leveraging funds without impacting personal assets. Loans are secured to the property itself, not your income or other assets. Lenders typically offer 60–80% LVR at rates slightly above standard loans.

Why Now is a Strategic Time

• Rental market strength: low vacancies and rising rents are boosting yields.

• Price stability: market steadiness offers buying opportunities.

• Interest Rates: Despite currently higher interest rates, SMSF property investing remains attractive because many regions offer positively-geared opportunities—where rental yields exceed borrowing costs—allowing trustees to lock in reliable cash flow.

  
  

How We Help

We specialise in supporting SMSF trustees with property investment loans. They handle the complexities, from structuring LRBA-compliant loans to navigating lender networks and legal requirements.

Final Word

Property investment through your SMSF offers a powerful path to retirement security—with stable rentals, potential growth, and strong tax advantages. But it's also complex; the right structure and advice make all the difference.

Reach out to us today if you'd like to explore your options with a Self Managed Super Fund.

Andrew Nott

* An SMSF trustee is one of the people (or a company director) who runs the SMSF. You choose how the money’s invested, make sure the laws are followed, and bear all responsibility—so it's a role with control and accountability.

** A bare trust in an SMSF setup is essentially a simple legal arrangement where a separate trustee (often a company) holds the property's legal title on behalf of your SMSF—while your fund retains all the benefits like rent and future sale proceeds. It’s used when your SMSF takes out a loan to buy property, ensuring the fund follows superannuation law, protects other assets, and transfers full ownership back to the SMSF once the loan is repaid.

The word “superannuation” originates from the Latin roots super (“above” or “beyond”) and annus (“year”), initially referring to someone who was “beyond the years” of active service or too old to continue working. Over time, it came to mean a pension or retirement fund, especially one provided after many years of service. Today, in countries like Australia, it refers to the compulsory system where employers and sometimes employees contribute to a fund that supports people financially once they retire.