Property Investment Through Self Managed Super Funds

Property investment within a SMSF can be a tax effective way to enhance retirement savings for members.  In accumulation phase the fund income tax rate is only 15% and capital gains tax is applied at 10% for assets held for more than twelve months.  Of course, property held by the individual outside of the SMSF would be taxed at marginal rates.


  • Assets held within SMSFs are protected from creditors should a member encounter bankruptcy.
  • Property rental income and any capital gains are taxed at the abovementioned concessional tax rates (in accumulation phase).
  • Rental income and any capital gains when the SMSF is wholly in pension phase are tax free.
  • Generally, rental income and capital gains are positive returns within a SMSF.
  • Members may transfer their business premises into a SMSF as an in-specie contribution.
  • Property investment being a medium to long term outlook is a suitable superannuation fund investment.


  • Any borrowing within a SMSF will be less tax effective due to the reduced rates of tax applicable, and there is always a risk of the fund not being able to meet loan repayments.
  • Transfer of business real property owned by a member will be a CGT event but, small business CGT concessions may be used to reduce or eliminate any CGT.
  • Substantial assets within a fund may not be readily liquid and the trustee needs them to be, for exit or rollover by members, plus death, divorce, disability.
  • Loss of tenant or failure to secure a tenant can put cash flow pressure on a SMSF – e.g. commercial properties may be vacant for extended periods.