Buying Property Through Your SMSF: What You Need to Know in 2025

SMSF UPDATE

**1. Yes, You Can Buy With Your SMSF**

SMSFs remain one of the few super funds that allow direct property ownership—including residential and commercial assets. However, all purchases must be made:

Solely to provide retirement income, not for living in or holiday homes.
From unrelated parties (unless commercial property under strict arm's‑length terms).

Partners and children can be co‑trustees—up to six members—but must act within formal trust rules.

2. New Tax Rules from 1 July 2025

Division 296: Funds with total balances over $3 million now face a 15% tax on unrealised gains, potentially impacting large property holdings.
ATO scrutiny: Expect tighter checks on property valuations, trust structures, and auditor independence.

Bottom line: If your SMSF holds over $3m—especially with bricks and mortar—you must review tax strategy, valuations, liquidity, and grant compliance.

3. Borrowing to Invest (LRBA)

SMSFs can borrow via Limited‑Recourse Borrowing Arrangements (LRBAs) to purchase property—but only if structured correctly, using a "bare trust".
In 2025, lenders (especially non‑banks) may offer up to 80% LVR, making commercial property easier to fund.
That said, political developments may threaten borrowing rules—keep a close eye on legislation.

4. Pros and Cons

Benefits

Tax‑efficient accumulation and pension-phase income—SMSF tax rates can be as low as 15% or even 0% during pension.
Strategic leverage—borrowing through SMSF enhances purchasing power.
Estate planning options—you can include family members and diversify member balances to adapt to new tax laws.

Risks

High compliance demands—trust deeds, valuations, audits, and sole-purpose adherence are non-negotiable.
Liquidity constraints—illiquid properties may leave you unable to meet tax, loan, or withdrawal obligations.
Tax surprises—unrealised gain tax and valuation errors can hit hard.

5. Getting It Right: Steps

Start with expert advice—talk to an SMSF accountant, adviser, broker, and solicitor.
Review your SMSF deed and investment strategy—ensure property and borrowing are permitted.
Structure borrowing properly (LRBA + bare trustee).
Secure an up‑to‑date independent valuation—ATO is watching closely.
Build liquidity buffers—cover loan, tax, and running costs.
Annual compliance—trustee minutes, audits, valuations, and SMSF annual return submissions must be on time.

READY TO TAKE ACTION

If you're considering property through your SMSF this year, here's how we can help at Investing In Property:

Free 15‑minute strategic audit

We'll assess your current super position, deed, borrowing setup, and compliance readiness.

Tailored roadmap

Including asset selection, loan options (up to 80% LVR), and new tax-mitigation strategies.

On‑ground delivery

From conveyancing to finance, we manage the full process—compliant, on time.

Your next step

Email us at enquiries@investinginproperty.com.au
Call us on 1300 889 512 for a no‑obligation chat

Summary

Buying property via SMSF still offers compelling tax and strategic rewards—but only if handled with updated compliance. Uneven structures, unprepared funds, or failing to plan for new taxation could outweigh the benefits.

Act fast to secure your position for 2025:

Know your SMSF's balance and tax exposure
Confirm borrowing structures are valid
Get valuations and compliance audit-ready
Deploy a plan that makes your investment meaningful, not risky

Let's put you in control of your retirement property strategy—with confidence, compliance, and clarity.