Nov 24, 2025 Joel Hernandez

Can a Self-Managed Superannuation Fund (SMSF) Invest in Property?

Australian real estate has experienced notable capital growth over the past decade, making it an appealing asset class for investors. For SMSFs, the ability to directly manage investments and benefit from concessional tax treatment adds to the appeal of property ownership. However, trustees must navigate strict regulations when considering property as an SMSF investment.

The Sole Purpose Test

SMSF investments must be made solely to provide retirement benefits to members. This rule prohibits members and their related parties from receiving any personal benefit from the property. For instance:

• Members cannot live in the property, even if they pay rent.
• SMSFs cannot own residential properties used as holiday homes by members or their families—even if occupancy is occasional and rent is paid at market rates.

Commercial Property & Related Party Transactions

When it comes to property, SMSFs are generally restricted from transacting with related parties, including purchasing residential property from them. For example, an SMSF cannot buy a member’s family home.

However, an exception exists for commercial business real property. An SMSF may:

• Purchase commercial property from a related party at market value.
• Lease the property to a related party, provided the lease is on arm’s-length commercial terms.

This offers business owners a strategic opportunity to hold their office or factory within their SMSF—so long as rent is paid at market rates and the arrangement complies with superannuation laws.

Property Valuations

All SMSF investments must be reported at market value. With rising property prices, the ATO has increased scrutiny to ensure assets are not undervalued.

Trustees are responsible for:

• Conducting annual property valuations.
• Ensuring valuations align with ATO guidelines.

Conclusion

While property can be a valuable addition to an SMSF portfolio, trustees must remain vigilant about compliance. Our financial planning team can help assess whether real estate is the right fit for your SMSF strategy.