Thinking of investing in property via an SMSF? Read this first

By Fergus Halliday 29 June 2021 | 1 minute read

Even as prices continue to swell, investing in property via an SMSF remains niche for a reason.

Thinking of investing in property via an SMSF? Read this first

In recent years, investing in real estate through a self-managed super fund has been touted as an alternative for younger Australians priced out of the property ladder.

The idea here is simple, namely since you can direct how your super is invested with a self-managed super fund, you can choose to take advantage of Australia’s property market.

However, there are a number of important limitations to this. For example, you cannot live in property you purchased via an SMSF, and any equity that builds up from either paying principal on the loan or the increase in value of the property cannot be accessed and used.

Still, for those considering climbing onto property ladder through this approach, Stake’s head of SMSF, Kris Kitto, has some words of warning.

“Although it’s one potential avenue, it’s definitely not the best from a cost-benefit perspective due to the high and unavoidable upfront costs,” Mr Kitto said.

That being said, Mr Kitto did note the potential of recent changes in SMSF property investment regulations.

From 1 July, SMSFs will be capped at six members, rather than the previous limit of four.

“It’s possible friends and family could pool funds, i.e. each member transfers an identical amount to a new SMSF, which is basically used as a special purpose investment trust to purchase an asset such as property,” he said.

“The advantage is that the six individuals can keep their existing industry or retail super accounts open to ensure they have diversified assets as well as insurances.”

However, Mr Kitto noted that “running an SMSF with six members can also be tricky, especially if disagreements arise or someone wants to pull out their balance. Professional advice should always be sought if young investors want to take this route.”

Instead, he recommended that younger investors take a look at the First Home Super Saver Scheme (FHSSS).

According to Mr Kitto, “The FHSSS is the most tax-effective way of saving up to $15,000 per year (each) towards that first step on the property ladder, for their principal residence.”

Looking forward, Mr Kitto said, “Australians have a love of property, so it’s always going to be a key asset for a portion of SMSFs. However, I don’t see property investment within SMSF becoming any more popular than it is now.”



Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.


A self-managed super fund is a private super fund that provides benefits to its members upon retirement, directly managed by an individual for their benefit and in compliance with super and tax laws.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable... Read more

Thinking of investing in property via an SMSF? Read this first
Thinking of investing in property via an SMSF? Read this first
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