With cost of living stabilising and interest rates cooling off, many Australians are looking deeper into their portfolio to find opportunities to build their future wealth. One strategy that’s getting a lot of attention in 2025 is buying property through a self-managed super fund (SMSF).
If you’re curious about how it works, this checklist will walk you through the key points – from the rules to the rewards – so you can move forward with confidence.
1. Get the basics right
- What can you buy?
- Residential property: Only if you’re buying from someone you’re not connected to. You (or your family) can’t live in it or rent it.
- Commercial, rural, or industrial property: Allowed – and you can even lease it back to your own business, as long as you’re paying market rent and keeping it all above board. (ATO – SMSF investments)
- The Sole Purpose Test: Your SMSF must exist purely to fund your retirement. Use it for anything else, and you risk big penalties. (ATO – Sole Purpose Test).
2. Is your SMSF ready for property?
There’s no official minimum balance, but most experts say you’ll need at least $175k–$200k in your fund to make it worthwhile.
3. Borrowing through an LRBA
A Limited Recourse Borrowing Arrangement (LRBA) lets your SMSF borrow to buy property. The property sits in a separate “bare trust” until the loan is paid off. In case of a default, the lender can only claim againts the property – not your other super assets.
A few rules to remember:
- It must be one single property. Multiple titles? Each one needs its own trust and loan.
- Any upgrades or renovations must be paid for with the SMSF’s own money – no borrowed cash allowed.
4. Keep it compliant
- Record keeping : Make sure all the expenses for the property are paid for by the SMSF and maintain property receipts for tax purposes
- You’re responsible for all audits and filing annual tax returns. (ATO – Annual obligations).
5. 2025 changes you should know
- Super Guarantee rate is 12% from 1 July 2025.(Australian Government – Super guarantee rate).
- Transfer Balance Cap (the limit on how much you can move from your super into the retirement phase) lifted to $2.0m. (ATO – Transfer balance cap).
6. The ups and downs
- Why it could be a good move:
- More control over your investments.
- Tax advantages – sometimes even tax exemptions in retirement.
- Business owners can rent commercial property to their own company.
- Why you might think twice:
- Higher costs – loans usually have higher interest rates, and SMSFs have setup and running costs.
- You are solely responsible for all decision making and ensuring ongoing compliance
- Compliance can be heavy – and mistakes can be expensive.
7. The quick checklist
- Check if your fund’s balance is sufficient.
- Consultant an accountant to seek advice on SMSF structure and cost estimation
- Consult a financial advisor and create an investment strategy.
- Get proper property valuations and make sure your purchase is at arm’s length.
- Keep enough cash in the fund for any ongoing costs.
- Work with a mortgage broker who understands SMSF lending
- Stay on top of audits, GST, and annual returns.
- Watch for post-July 2025 rule changes.
At Kian Mortgage Solutions, SMSF property loans are our speciality. We’ll guide you through structuring your loan, staying compliant, and planning for the future – so you can grow your property portfolio without the stress.
📞 Call 1300 00 KIAN or schedule an appointment to check your SMSF’s readiness, explore your borrowing options, and make your property purchase smooth from start to finish .
