What Types of Properties Can You Buy with an SMSF?

What Types of Properties Can You Buy with an SMSF?

A Self-Managed Super Fund (SMSF) can invest in property, but not all property types are allowed under superannuation laws. The Australian Taxation Office (ATO) sets strict rules on what an SMSF can buy — and how it must be used.

Understanding which property types qualify, and how they align with the SMSF’s purpose, is essential when building a long-term investment strategy through super.

Residential Property: Can an SMSF Buy a House or Apartment?

Yes — but there are clear restrictions around personal use.

• SMSFs can buy residential property only for investment purposes.

• The property cannot be lived in by any SMSF member or related party.

• It must be rented to an unrelated third party at market rates.

• Even after retirement, SMSF members cannot live in the property unless it is transferred out of the fund first.

Key Insight: SMSF-owned residential property must be used strictly as an investment — never for personal occupancy.

Commercial Property: A Popular Option for Business Owners

Commercial property is one of the most flexible SMSF investment options — especially for business owners.

• SMSFs can purchase commercial assets such as offices, retail spaces, warehouses, or industrial properties.

• You can lease the property to your own business, as long as it’s done at market rates under a formal lease agreement.

• This still satisfies the Sole Purpose Test if documented and structured properly.

Key Insight: Commercial property allows business owners to operate from premises owned by their SMSF — offering both stability and tax advantages.

Rural and Agricultural Property: Can SMSFs Own Farmland?

SMSFs are allowed to invest in rural or agricultural land, provided the asset meets business-use requirements.

• The farmland must be used in a genuine business operation.

• It can be leased to a related party (such as a family farming business) if market rent is paid and the arrangement is clearly documented.

Key Insight: Farmland can work well in an SMSF if the property is used commercially and lease terms remain at arm’s length.

Off-the-Plan Properties: Can SMSFs Invest in New Developments?

SMSFs can invest in off-the-plan properties — with strict limitations around how they’re purchased.

• SMSFs can purchase off-the-plan units, house-and-land packages, or townhouses under a single contract.

• Borrowing is allowed if the purchase structure complies with Limited Recourse Borrowing Arrangement (LRBA) rules.

• SMSFs cannot borrow for construction loans or progressive payment contracts.

Key Insight: SMSFs can invest in new developments — but only when the contract is compliant and fully funded or financed under correct borrowing terms.

Overseas Property: Can SMSFs Buy International Real Estate?

Technically possible, but rarely advised.

• Overseas properties present complex compliance, taxation, and audit challenges.

• The ATO may scrutinise the investment’s alignment with the Sole Purpose Test.

Key Insight: Investing in overseas property through an SMSF is risky and generally not recommended for compliance and management reasons.

Final Thoughts

While SMSFs offer the opportunity to invest in a range of property types, not all assets are eligible. Residential, commercial, rural, and some off-the-plan properties can be suitable — but trustees must ensure all purchases follow ATO rules, the Sole Purpose Test, and superannuation laws.

Thinking about SMSF property investment? Book an investment session with PropVest today.

Disclaimer: This article provides general information only and does not constitute financial, legal, or tax advice. You should seek independent advice tailored to your circumstances before acting.