Yes, you can still buy property through your SMSF but since August 2026 the rules have changed.
In short, you:
- can buy business real property
- can borrow to buy business real property
- can buy residential property
- cannot borrow to buy residential property – it must be bought with the SMSFs funds
What is a Self-Managed Superannuation Fund (SMSF)?
An SMSF is a trust set up for the sole purpose of providing retirement benefits to its members or their dependants in the event of their death before retirement.
The members of the fund control the fund, and they make the investment decisions. They are also responsible for running the fund administratively.
Because the members are responsible for running the fund it allows them to have control and flexibility on how their retirement savings are invested.
Who overseas the regulation of SMSFs
The Australian Taxation Office (ATO) regulates SMSFs and ensures they comply with both tax and superannuation laws.
The main pieces of legislation that regulate SMSFs are:
- Superannuation Industry (Supervision) Act 1993 (SIS)
- Superannuation Industry (Supervision) Regulations 1994
- Income Tax Assessment Act 1997
- Superannuation (Self Managed Superannuation Funds) Taxation Act 1987
- Corporations Act 2001
Parties in an SMSF
There are basically two distinct parties in any SMSF and they are the:
- member/s whose superannuation is held in the trust; and
- trustee which can be either an individual or a corporate trustee
The trustee’s duties include:
- making investment decisions
- appointing an auditor
- lodging annual tax returns
- determining who can join the fund
- taking and making contributions to members
- ensuring legal and administrative compliance including keeping records
- ensure trust assets are kept separately from personal and business assets
How can my SMSF invest in property?
Section 67 of the SIS specifically prohibits SMSFs from borrowing money to invest in property so as to limit the risk and align with the sole purpose test to protect superannuation savings for retirement.
Sections 67A and 67B of the SIS provide an important exception to this allowing an SMSF to borrow through a limited recourse borrowing arrangement (LRBA) subject to certain conditions.
Recently the Treasury Laws Amendment (Tax Reform No.1) Act 2026 legislated to prohibit SMSFs to use LRBAs to purchase residential property after 10 August 2026.
Existing residential LRBAs entered into before the commencement date will continue under grandfathering provisions.
It is important to note that this does not prohibit an SMSF to buy real property if it can afford to do so with its own money without the need to borrow funds.
SMSFs can still enter into an LRBA to purchase business real property under the SIS.
What is Business Real Property (BRP)?
If you are contemplating to buy BRP it is critical you understand exactly what that entails.
The newly amended Section 67A(2)(c) provides that:
“for an asset that is real property—the asset is business real property (within the meaning of section 66 of this Act).”
Section 66(5) of the SIS provides that:
business real property, in relation to an entity, means:
- any freehold or leasehold interest of the entity in real property; or
- any interest of the entity in Crown land, other than a leasehold interest, being an interest that is capable of assignment or transfer; or
- if another class of interest in relation to real property is prescribed by the regulations for the purposes of this paragraph—any interest belonging to that class that is held by the entity;
where the real property is used wholly and exclusively in one or more businesses (whether carried on by the entity or not) but does not include any interest held in the capacity of beneficiary of a trust estate.
What should you consider before buying BRP in your SMSF?
Before considering buying BRP in your SMSF it is important to make sure that the property qualifies as BRP, and you should obtain expert advice in relation to this.
Other considerations are:
- compliance and legislative implications
- market value of the property and this should be through an independent valuation
- terms of any lease in place
- taxation implications
Purchasing a BRP through your SMSF is a complex transaction with significant legal, financial and compliance implications and obligations.
We advise our clients to engage:
- with their accountant to review their SMSF compliance and cashflow
- a financial adviser to assess the retirement strategy and risk.
- an experienced mortgage broker or banker who understands LRBA borrowing
How Can FC Lawyers help?
Our business and property team have assisted trustees and members with property purchases through their SMSF’s for over twenty years.
We can also review and advise on whether your SMSF’s is compliant.
Contact us to discuss your needs.
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