Purchasing Real Estate with Superannuation Funds

Real estate

With rise in volatility of markets all over, people have been looking at other options for their superannuation finances. With the introduction of limited borrowing from 2007, buying real estate with superannuation has become a more meaningful strategy.

Like all other superannuation funds, self managed super funds or SMSFs are a method of saving for retirement. At present, buying properties through SMSF is considered a good tactic. The difference between this type of funds and other popular types is that, normally, the members of this type are also trustees. Hence, they’re actually running it for their own interest and profit.

The lending rules now permit this type of resource to borrow money to purchase real estate under certain circumstances. The reason is that individuals can enhance the size of their super assets by increasing their potential to earn from the profits of a real estate investment. After some time, they can dispose of this real estate or house and have a considerable final balance as retirement fund.

Real estate

Rules to Take Note Of

The Superannuation Industry Supervision Act (SIS Act) makes the ground rules for the SMSF and for buying properties through them. So, if the money from it is used to invest in purchase a property, due attention must be paid to make sure it doesn’t violate the SIS Act. Finances should first have an investment plan in place to allow investment in direct real estate before considering investment in business or residential real estate. The trustees should make sure that the strategy is transparent and that it will benefit all the members. It’s advisable to take the advice of a licensed financial expert before setting the appropriate investment plan.


Some restrictions such as not being able to purchase from a person, who is a trustee’s kin, apply. Also, the property acquired can’t be leased to a person or an entity related to a trustee or a member. These two, however, are applicable only to your fund and personal real estate. For business-related real estate, there are no such restrictions applicable. Any kind of dealing can be made with another funds’ trustee or member. Apartments under construction can be purchased and limited borrowing is also permitted for repairs and maintenance of the asset.

About Eleanor Sharp
Eleanor Sharp is the author of AGSE Law. As a paralegal, she has worked with attorneys in many fields to ensure their clients get the best advice and representation. She is passionate about helping people understand the complexities of the legal system so they can make better decisions for themselves. Eleanor loves reading, travel, and spending time with her family. She hopes her articles will help others navigate life’s legal intricacies with confidence.