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The federal budget has prompted many property investors to reassess how they structure their investments – and consider investing through a self-managed super fund (SMSF).
From 1 July 2027, negative gearing for residential property purchased after 12 May 2026 will be limited to new builds that genuinely add to housing supply, while properties held on 12 May 2026, including those under contract but not yet settled, will be exempt. The Budget also confirmed changes to capital gains tax, with the 50% CGT discount to be replaced with cost base indexation and a 30% minimum tax rate on real capital gains.
However, properties purchased through an SMSF retain their existing taxation benefits, which has led to some investors taking a closer look at this strategy.
How SMSF property investment works
An SMSF allows members to manage their own superannuation and choose how their retirement savings are invested.
One option is investing in property. An SMSF can purchase residential or commercial property, either outright or, in some circumstances, using a limited-recourse borrowing arrangement (LRBA). In simple terms, if the SMSF can’t repay the loan, the lender can generally only claim the property that was purchased with the loan, not the fund’s other assets.
However, strict rules apply. For example, residential property purchased through an SMSF generally cannot be lived in by fund members or their relatives, and the investment must satisfy the fund’s sole purpose of providing retirement benefits.
The potential benefits and drawbacks
For some investors, SMSF property investment can offer several advantages:
- Greater control over investment decisions.
- Potential tax concessions available within the superannuation environment.
- The ability to hold a long-term asset as part of a retirement strategy.
However, SMSF property investment is not suitable for everyone.
Potential drawbacks include:
- Higher setup and ongoing administration costs.
- Strict compliance obligations.
- Limited diversification if a large proportion of retirement savings are invested in a single property.
- Additional complexity when borrowing through an SMSF.
The importance of professional support
Because SMSF property investing involves superannuation law, lending requirements, taxation considerations and property selection, it is important to work with experienced professionals.
A broker can help arrange suitable finance structures and identify lenders that operate in the SMSF market. At the same time, an accountant, financial planner and legal professional can help ensure the strategy aligns with your broader retirement objectives and complies with relevant regulations.
For the right investor, SMSF property can play an important role in a long-term wealth strategy. However, it is a specialised area that requires careful planning and consideration.
SMSF property investment involves specialised lending requirements. Contact me to discuss the process and whether this approach may suit your circumstances.
