Self-Managed Superannuation Fund
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Self-Managed Superannuation Fund (SMSF )
Purchasing a property with SMSF is a popular investment strategy in Australia. However, there are certain rules and regulations that must be followed to ensure compliance with the law.
A SMSF can only purchase property that will be used to provide retirement benefits for the members of the fund. The property must:
- Meet the ‘sole purpose test’ of solely providing retirement benefits to fund members;
Not be acquired from a related party of a member;
Not be lived in or rented by a fund member or any fund members’ related parties.
If a SMSF purchases a commercial premises, it can be leased to a fund member for their business. However, it must be leased at the market rate and follow specific rules. Borrowing or gearing your super into property involves very strict borrowing conditions. It’s called a ‘limited recourse borrowing arrangement’ (LRBA). You can only purchase a single asset with an LRBA, for example, a residential or commercial property. It is important to get advice from a licensed financial adviser before making any investment decisions.
