Property in a SMSF - General Q&A

This is a common question and there is no definitive answer. There are many variables such as the property type, year until retirement, your goals, contributions and much more. There are many options and we will do our best to provide you with the right information and options for your unique situation. Speak to a Quantum Wealth advisor and we can explain what options are available.

Yes, this is common practice, and this can be arranged at Quantum. This type of loan is called a 'Limited Recourse Loan' and the application tends to be is more complex than a standard mortgage lending.

Typically, a property can be purchased through a SMSF through a bare trust that is established to hold the actual property. Quantum can arrange this tax structure for you.

Much like regular property investment, there are the usual costs involved with purchasing property. All these costs are paid by the super fund.

No. For the most part, you or any fund members or related parties (including family or friends) are not allowed to live in or rent any property bought through your superannuation. That being said, if the property is a Commercial Real Estate such as a factory or office, it can be leased to a business you own (at market rates).

Renovations can be made to a property owned through a superannuation fund, however they may be limited depending on the property ownership. If your SMSF owns the property outright, you are allowed to renovate or improve the property, however, if your SMSF has borrowed towards the property, you are only able to make renovations that will not change the character of the property.

No. Fund members, and related parties, are not allowed to live or rent property bought through your superannuation fund.

Yes, all plant and equipment associated with your investment property that have a finite lifetime such as carpets, lighting, etc can be depreciated. This also covers capital works depreciation, which are aspects of more permanent improvements and alterations to your investment property. Note tax laws changes to please discuss with your Quantum advisor the actual specifics of your own situation.

Yes. Negative gearing is possible through an SMSF, much like regular property investment. Therefore, you will be able to offset tax within your fund and benefit from the capital gains on the property in the future. Despite this, it’s important to understand that since it is an SMSF property investment, the deductions will be claimed by the fund and not in your personal name.

However as you are making contributions to your SMSF, these are tax deductible in your own name and any tax payable in the SMSF (typically 15%) can be offset by the negative gearing loss in the SMSF.

Yes, however you will need to transfer it from your superannuation fund to your personal name. Depending on the laws of your state, you will also have to pay any state duties involved with the transfer. There is much to consider when transferring a property out of your SMSF and speaking with a Quantum Advisor is highly recommended.