
Buying property through a self-managed super fund (SMSF) can be a powerful wealth-building strategy, but it comes with strict rules and responsibilities. As the trustee of an SMSF, you’ll be responsible for ensuring all investment decisions comply with superannuation laws and benefit the fund’s members. If you’re considering buying a property within your SMSF, here’s a clear step-by-step guide to help you understand the process—from setup to settlement.
Step 1: Initial Planning
Do Your Research
Setting up an SMSF is a major financial decision and not one to take lightly. It’s not just about the property—you’re also taking on the responsibility of managing your own superannuation fund. This includes record-keeping, preparing financial statements, arranging audits, and ensuring ongoing compliance with the ATO’s regulations.
Before diving in, take the time to understand what a SMSF is, how it operates, and the rules around property investments. Make sure you’re comfortable with the ongoing obligations that come with managing your own fund. If you’re unsure, seeking professional advice is a must.
Contact a Financial Adviser
If you’re still wondering whether a SMSF is right for your situation, speak with a licensed financial adviser. They can assess your current superannuation balance, retirement goals, and risk profile to determine if buying property through an SMSF is a suitable strategy for you.
Contact a Mortgage Broker
Most SMSFs don’t have enough cash to buy property outright, which means you’ll likely need to borrow. SMSFs can borrow under a structure called a Limited Recourse Borrowing Arrangement (LRBA). It’s not the same as a personal home loan, and only certain lenders offer them.
Get in touch with a mortgage broker who understands SMSF lending. They’ll help you determine your fund’s borrowing capacity, walk you through lending requirements, and assist with obtaining pre-approval.
Step 2: Set Up Your SMSF
Once you’ve decided to proceed, it’s time to set up your SMSF.
At autoSMSF, we take care of the SMSF setup process from start to finish. We’ll prepare all required documentation, including the SMSF trust deed, trustee declarations, ATO registrations, and more.
What’s involved:
- Complete our application form
- Sign the SMSF trust deed
- Register the SMSF with the ATO
Step 3: Fund Preparation
Open a SMSF Bank Account
It’s a legal requirement for your SMSF to have a separate bank account. All superannuation contributions, investment income, loan repayments, and property-related expenses must flow through this account to maintain compliance.
You can open this account at any bank of your choice. It’s a good idea to check with your SMSF accountant if you’re unsure which features you may need—especially if you’re planning to buy property and will require loan repayments and rental income processing.
Prepare an Investment Strategy
Every SMSF must have a documented investment strategy. This outlines how the fund intends to achieve its retirement goals and takes into account:
- Risk tolerance of members
- Diversification
- Liquidity
- Insurance considerations
- Retirement objectives
Before your SMSF purchases a property, this investment strategy must be reviewed (and updated if necessary) to demonstrate that buying property aligns with the fund’s overall objectives.
Consider Insurance
As trustee, you are required to consider insurance for each fund member. This includes life insurance, total and permanent disability (TPD), and income protection.
If you’re planning to roll over your entire super balance to the SMSF, your current retail or industry super account will likely be closed—and any existing insurance will be cancelled. Before rolling over, make sure alternative cover has been arranged to avoid leaving members without protection.
Rollover Superannuation Funds
Once your SMSF is set up and the bank account is in place, you can request a rollover of funds from your existing super account into the SMSF.
This is generally done through the ATO’s online services or your existing super fund’s portal. Be sure to allow adequate time for processing as this step must be complete before your SMSF can purchase property.
Step 4: Property Acquisition Process
Engage Professionals for the Property Purchase
Buying property through a SMSF is more complex than a personal purchase. You’ll need a conveyancer who understands SMSF rules and the importance of structuring the contract correctly.
We strongly recommend choosing a conveyancer who has previous experience with SMSF purchases. Errors in the contract—such as naming the wrong purchaser or using incorrect dates—can lead to serious complications, including double stamp duty in some states.
Set Up a Bare Trust and Trustee Company
SMSFs that borrow to buy property must do so under a Bare Trust structure. This trust holds legal ownership of the property on behalf of the SMSF while the loan is in place.
At autoSMSF, we’ll establish your Bare Trust and corporate trustee once your property offer has been accepted. This step is critical and must be done before the property contract is signed.
Sign the Property Contract (Correctly)
It’s absolutely essential that the property contract is signed using the correct legal name—typically the name of the Bare Trust trustee.
Each state in Australia has different stamp duty laws, and getting this wrong could result in a second round of stamp duty being applied. Work closely with your conveyancer, broker, and SMSF accountant to ensure every detail is accurate from the beginning.
Step 5: Settlement and Management
When it’s time to settle, your conveyancer and broker will coordinate the settlement process with the lender. autoSMSF will provide all the necessary documentation to support the loan and settlement process.
After settlement:
- The property will be held in the Bare Trust for the benefit of the SMSF
- Rental income will be paid into the SMSF bank account
- Loan repayments will be made from SMSF funds
Final Thoughts
Buying property through an SMSF can offer long-term growth, asset protection, and tax advantages—but only when done properly. The process involves multiple steps, specialist advice, and a firm understanding of SMSF compliance rules.
At autoSMSF, we specialise in making the process seamless by helping you:
- Set up your SMSF and Bare Trust
- Navigate property compliance
- Provide ongoing accounting and support
Whether you’re just starting your research or are ready to purchase, get in touch with autoSMSF today to make sure your SMSF property journey starts off on the right foot.
Need help getting started? Contact us at autoSMSF.com.au or call 1300 014 900 to speak to an SMSF specialist today.