Property Investment

At Superannuation Warehouse, we specialise in SMSF administration. We can execute the setup of a Bare Trust structure where the Trustees have decided to purchase a property with loans. The typical structure is set out below:


Bare Trust Structure

SMSFs can invest in commercial or residential property; however, neither Trustees nor related parties are permitted to live in the property or use the property as a holiday house. The sole purpose of the property must be as an investment of your SMSF.

Some important points regarding SMSF property investment:

  • It is important that the SMSF, including the structure above, is set up before you invest in any property. An SMSF can’t borrow money in its own right; hence, a Bare Trust structure must be put in place to facilitate the loans.
  • The only purpose of the Bare Trust (also referred to as a Property Trust) is to keep title over the investment property until the loan is paid off.
  • All property-related costs can be paid by the SMSF.
  • The SMSF receives rental income and pays for all operating expenses and loan repayments.
  • In this particular structure only one property is allowed.
  • The property will revert back to the SMSF when the loan is repaid.
  • Funds can be borrowed from the Trustees or the bank, or a combination of both.
  • The loan type a bank can offer the SMSF is known as a limited recourse loan. Limited recourse means that, should the loan default, the bank has no right of recourse on the SMSF’s other assets.
  • For this reason banks usually ask for a personal guarantee over the property from Trustees.
  • With member-guaranteed loans, the maximum Loan-to-Valuation Ratios (LVRs) are usually around 80% for residential properties and 70% for commercial.
  • When there’s a bank loan with a  60% LVR, the bank may waive the requirement for a guarantee from the Trustees.
  • Trustees can also lend to the SMSF, so it’s possible to do it without a bank.
  • Trustees can borrow from the bank and then on-lend to the SMSF – this tends to make the administration easier.
  • The Bare Trust and Corporate Trustee are merely the legal entities that hold the property – all transactions take place within the SMSF.
  • Superannuation Warehouse charges a one-off fee to set up these entities, after which there is no additional fee for their maintenance (it’s included in your fixed monthly fee).

An SMSF cannot normally take out loans per se. However, in order to purchase a property, an SMSF can use a Limited Recourse Borrowing Arrangement. To do this, the Trustees must provide the bank with a guarantee for the loan. You might want to use a mortgage broker to help you find the most suitable loan for your circumstances from a panel of lenders.

When we set up a Limited Recourse Borrowing Arrangement for an SMSF, we issue a new Trust Deed. Within the industry, these Trust Deeds are regarded as the best because the banks will generally accepted them for SMSF property loans, thus ensuring that the loan approval process runs smoothly.

Repair and Maintenance

The cost of any repairs and maintenance undertaken on an investment property can be deducted in the SMSF. To find out more about the differences between repairs and improvements, click here and view the ATO guidelines.

What name should the SMSF use with property investment?

Rules differ in each state, so please verify titles below with  a legal professional. Generally, use the Custody Trust’s name. For example:

  • For an individual trustee, “John Summers ATF Declaration of Custody Trust for the ABC Super Fund”
  • For a corporate trustee, “ABC Pty Ltd ACN number ATF Declaration of Custody Trust for the ABC Super Fund”

Land registries don’t generally accept any reference to a Custodian Trust. The transfer of land should simply be registered in the name of the Custodian Trustee, for example:

  • When the Custodian Trust uses individual trustees, use the names of the individuals, e.g.  ”John Summers and Sarah Summers”
  • When the Custodian Trust uses a Custodian Trustee, use the name of the Custodian Trust, e.g. “ABC Custody Pty Ltd ACN number”.

When the loan is paid off, there is no need to keep the Custodian Trust. The property will then revert back to the SMSF. There should be no stamp duty implications as there is no change in beneficial interest in the property.

For more info on how you can invest in property in your SMSF, please watch the video below.

Lastly, as the Fund purchases an investment property, there are many documents that you need to keep on your records and provide them to us when we prepare the Annual Return for your Fund. To assist you with this, please use the Checklist we provided in the link below when the Fund start to purchase the asset.

Property Investment Checklist
  • Sean Chamberlin

    I am considering creating a SMSF to invest in a residential investment property. We would like to eventually reside in the property ourselves and understand that the SMSF would have to sell the property to a fund member before a member is able to reside in it (with purchase price being at fair market value). My question is whether or not stamp duty would apply on the transfer of the property to a member at the time of sale and/or whether any other fees would apply? Thank you for your assistance.

    • superannuationwarehouse

      Sean, you are correct in that you can purchase a property
      from the SMSF. If you meet a condition of release, you can take the property as
      well as a pension or lump sum payment.

      On the stamp duty, my understanding is no stamp duty is
      payable as there is no change in beneficial ownership.

      The titles office does not recognise Trusts and the name of the Trustee will
      appear on title. So this may aide in the objectives you have. The notes above
      are industry consensus and not legal advice – this can be a legal matter.

      Trust this answers your question.

      • Em

        Could you please clarify: is this a mere transfer or nominal sale of the property?

  • mark hobson

    Question: It concerns TAX and negative gearing on house investment in a SMSF. If a property is negatively geared does the negative geared tax accumulate year on year or does the TAX department pay the SMSF money back (based on input tax 15%)?

    • superannuationwarehouse


      In general, negative gearing in an SMSF is not a popular strategy. This is due to the relatively low tax effect in super of 15%. In a personal capacity, the higher marginal tax rates make negative gearing a more popular strategy.

      Additional to this, banks require an SMSF to have at least a 20% deposit in order to give a bank loan. This makes most properties positively geared from the outset.

      When the SMSF makes a taxable loss in the current year this loss will be carried over to the next financial year. This loss is then offset against taxable income in future years.

      A sensible strategy is to use a Quantity Surveyor report like BMT. This will bring forward tax depreciation in property and not only give a time value of money, but also ensure a maximum write-off in the accumulation phase, i.e. before the pension phase where tax is NIL. See our page on property depreciation for more info on this.

  • Jana

    Can I use SMSF to buy a land and then build two townhouses, sell one and keep one for renting? All expenses for purchasing land and constructions are to be paid by SMSF either from the existing fund or through borrowing under Bare Trust Structure.

    • superannuationwarehouse


      We set up a bare trust when there’s a loan in an SMSF. While a loan and bare trust is in place in an SMSF, you are not allowed to alter the characteristics of the property, e.g. adding a bedroom, add a granny flat or do a subdivision. You can do these alterations if there’s no loan on the property. For more rules on property, see the ATO examples by following this link:

      Trust this is helpful.

  • james

    If I want to buy property I need a bare trust. where do I go on the website to request a bare trust setup or do I just set up 2 corporate trusts?

  • Elias Khazen

    Hi I would like to use my individual superannuation to buy a house. What are the steps and is it possible and what is the cost

    • Hein Preller


      If you do not have an SMSF and want to set up a new Fund with the appropriate structures, we will need to set up 3 entities in addition to the SMSF, as explained in the diagram above.

      The cost will be 3 x $950 plus $350 to set up the SMSF. This totals $3,200.

      Be mindful you can’t live in a house owned by an SMSF. It has to be for investment purposes. For the rules and guidelines on property investment with an SMSF, see here:

      For our fee schedule explaining fees, see here:

      Trust this gives you the guidance needed.

  • Michael Tonks

    I have a question I have a super anuation fund held in another country and is producing better returns am I able to set up a smsf and transfer the funds from my Aus super to my overseas super fund?

    I am aware of cross tasman agreement with NZ however the country in which I hold my other super account is not in NZ.

    • Superannuation Warehouse


      On the basis that the Deed and Investment Strategy of an SMSF allows for it, an SMSF can invest in overseas assets.

      When investing overseas, make sure the SMSF has a legal enforceable right to the assets it owns. See some guideline on asset ownership here:

      Trust this gives you some idea of what is allowable.

  • Reuben Paul


    Few more questions before I set this up please

    Ongoing cost for Tax returns and Audit is it $79 a month?

    Which Bank would be used to set up? Eg to save on conversation fees

    How do I pay for the investment property in India from the bank account. Is it online transfer from the SMSF bank account or cheque and would I need to pay tax for the amount transferred?

    How long would it take to set up the corporate trustee fund?

    Is there any advice on how do I set up the property’s sale agreement in India. For a corporate trustee structure and as the property is in India The sale agreeement would have my name as the buyer, director of XYZ Ltd or just my name? And then we do a disclosure of trust here in Australia? Not sure how this works

    The property will be purchased outright. No loan required. Hence a bare trust will not be required

    If I need to call to ask a query can I ring the number 03 85553238?

    Many Thanks


    • Superannuation Warehouse


      Fees noted above is correct and we can set up a Macquarie bank account. This is a dedicated SMSF bank account with no monthly bank fees. However, you can set up with another bank if you prefer. Your choice.

      For overseas properties, best is to have a bank account for the SMSF in the country the Fund owns the property:

      When investing overseas, the SMSF must have a legal enforceable right to the asset it owns. If the SMSF name is not noted on the property title, we note ownership via a declaration of custody trust. We use external legal documents for this, so there is an extra cost.

      The phone number you note is our office number. We do not have conversations with non-clients as this may be seen as financial advice. We are not a financial advisor, we are an accounting firm. Hence we can give factual information but the decisions to act is yours.

  • Reuben Paul


    Could you please assist with the below queries.

    Ongoing cost for Tax returns and Audit is it $79 a month?

    Which Bank would be used to set up?

    How do I pay for the investment property in India from the bank account. Is it online transfer from the SMSF bank account or cheque and would I need to pay tax for the amount transferred?

    How long would it take to set up the corporate trustee fund?

    Is there any advice on how do I set up the property’s sale agreement in India. For a corporate trustee structure and as the property is in India The sale agreeement would have my name as the buyer, director of XYZ Ltd or just my name? And then we do a disclosure of trust here in Australia? Not sure how this works


  • Greg and Jazz Phipps


    We have a SMSF. We bought a property outright 4 years ago. We now want to borrow money from our SMSF and invest in an independent business overseas(not run by us), for 15% of the profit. Is this possible?

    • Superannuation Warehouse


      An SMSF can generally not have any borrowing unless certain conditions are met.

      The first issue is the SMSF can’t provide a loan to you. If you were to take a loan from the SMSF, this is a breach of the in-house asset rules:

      Trust this gives you some guidance.

  • Julie


    Thank you for all the great info. Can we set up a SMSF and buy our current PPOR with a loan (<70% LVR), to rent out as an investment property?, So that we can then buy a new PPOR that is more expensive. Do we have to pay stamp duty in this case? I note in a comment below, if you want to transfer it back to your ownership for e.g. at retirement, no stamp duty is payable. What is the cost to have a consultation to discuss positives/negatives of what we are thinking? I do have lots of questions about the possibility of buying properties within SMSF.

  • Alicia Dominguez

    Hi Superannuation Warehouse,
    I have purchased a Farming property via my SMSF in line with our investment strategy. The property includes a house in need of many repairs.
    I am 1 of 2 directors in a Pty Ltd Co. that will lease the farm property from the SMSF at market value for the purpose of operating the farm.
    My question is if we also want to uplift the existing house (renovations) and offer Farm Stay accommodation to the public via AIRBNB managed by the same Company is this allowed by ATO as the Company is obviously owned by some of the SMSF Trustees?

    • Superannuation Warehouse


      As the SMSF is the owner of the property, it is the SMSF that must pay for the renovations.

      The use of a farmhouse is usually incidental to the normal farm activities. A farm is therefore usually classified as a commercial property. You can rent the house to a tennant of your choice, including an Air BnB.

      Keep well,

  • Reeta Devi

    Hi Team

    I have just recently setup my SMSF and invested in a residential property where I will be renovating the old properties to Flip with in Budget

    I have a couple of queries please if you can help confirm the below

    Can I get the loan from my close friend if i don’t have enough money in my SMSF to complete my Project and pay after the sale of my property

    Also pay the balance to the contractors after the selling of the property which will be a written contract.

    Appreciate your help and if you can please email me the checklist guidelines of do’s and dont’s on SMSF.

    Kind regards

    • Superannuation Warehouse


      When you obtain a loan in the SMSF, be mindful that you can’t change the nature of the asset. This means you can’t make a 3 bedroom a 5 bedroom or do a subdivision.

      However, if its repairs and the naure of the asset is not changing, the loan may be acceptable. You can also see the ATO rules here:

      Trust this gives you the guidance needed.

Contact Details


Peace Of Mind

We are Melbourne based with clients throughout Australia. Our SMSF administration service is mostly paperless. This enable us to charge a fair fee, resulting in a good value-proposition for you.

No Advice

Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.