"Can I buy an investment property through my SMSF?"
It's a question I get regularly from clients approaching retirement—particularly those who've watched St George property values climb and want their super working harder than term deposits.
The short answer: yes, but 2026 brings several changes that make the rules more complex than ever. And with the ATO actively cracking down on non-compliance, getting this wrong can cost you your super fund's concessional tax status entirely.
I'm not an SMSF specialist or financial adviser, but after 25 years helping St George families buy and sell property—including many SMSF-related transactions—I've seen what works, what doesn't, and where people commonly get caught out.
What's Changing for SMSF Property Investment in 2026
1. Payday Super (Effective 1 July 2026)
The biggest administrative change in years.
Old rule: Employers had until the quarterly SG deadline to make superannuation contributions.
New rule: Super must be paid on payday and received by your fund within 7 business days.
Why this matters for SMSF property investors:
- More frequent contributions = better cash flow tracking
- More opportunities for deposits to fund loan repayments
- More administration for your SMSF if you're self-employed
- Long-term property investors with significant unrealised gains
- Those with properties purchased decades ago now worth substantially more
- Anyone with multiple super assets totalling $3M+
- Related party transactions not at arm's length
- Properties benefiting members personally
- Inadequate documentation and valuations
- Must be purely for investment (tenanted to unrelated parties)
- All income goes into the fund
- All expenses paid from the fund
- One of the few ways to benefit from SMSF property personally
- Lease must be at market rates, documented properly
- Works well for business owners with established premises
- The ONLY way SMSFs can borrow for property
- Property held in a separate trust until loan repaid
- Lender's recourse limited to that specific property
- Not even temporarily between tenants
- Not even "just while renovating"
- Severe penalties if breached
- Your kids can't rent it
- Your parents can't stay there
- Related company staff can't use it
- Cannot purchase your existing investment property into SMSF
- Commercial property has different rules
- Lower entry point suits SMSF deposit requirements
- Strong rental demand from professionals
- Easy to manage, low maintenance
- Good capital growth trajectory
- Higher yields than houses
- Appeals to families wanting more space
- Strata management handles externals
- Medical suites near St George Hospital
- Retail spaces in established strips
- Small warehouses/offices in industrial areas
- Requires substantial SMSF balance
- LRBA loans harder to obtain at higher values
- Concentration risk in single asset
- Cannot significantly alter property character with borrowed funds
- Renovations limited until LRBA fully repaid
- Development gains may push you over $3M threshold
- Purchase price: $700,000
- 30% deposit required: $210,000
- Stamp duty + costs: ~$35,000
- Cash buffer for expenses: $30,000
- Total funds needed: ~$275,000
- Reflects broader lending market conditions
- Your SMSF accountant can confirm exact rates
- Documentation essential for compliance
- Your fund balance is $400,000+ after purchase
- You have reliable, documented rental income expectations
- You understand the 20-30 year commitment
- You have professional SMSF and financial advice
- You're comfortable with illiquidity
- Fund balance is under $300,000
- You might need to access super in 5-10 years
- You're uncomfortable with leveraged property
- Your super is your only significant asset
- You want flexibility to change strategy
- Ensures compliance with super laws
- Prepares accounts and tax returns
- Coordinates annual audit
- Assesses whether property suits your retirement strategy
- Reviews concentration and liquidity risks
- Provides Statement of Advice
- Prepares trust deed amendments if needed
- Reviews LRBA documentation
- Ensures correct property holding structure
- Identifies suitable investment properties
- Provides realistic rental appraisals
- Manages tenant placement and ongoing management
- Sources LRBA-compliant lenders
- Navigates stricter lending criteria
- Coordinates timing with settlement
The Small Business Superannuation Clearing House (SBSCH) closes July 2026, so you'll need a new clearing house solution.
2. 30% Tax on High Balances (Effective 1 July 2026)
If your total super balance exceeds $3 million, a new 30% concessional tax rate applies to a portion of your earnings.
Who this affects in St George:
Critical point: This includes unrealised capital gains. A property you bought for $600,000 in Sans Souci that's now worth $1.8 million could trigger tax on paper gains even if you haven't sold.
3. Tightened ATO Compliance Focus
The ATO has allocated additional resources to SMSF audits, particularly targeting:
Can Your SMSF Buy Property in St George?
Let's cut through the complexity with practical guidance.
What You CAN Do:
✅ Buy residential investment property
✅ Buy commercial property and lease it to your business
✅ Borrow using a Limited Recourse Borrowing Arrangement (LRBA)
What You CANNOT Do:
❌ Live in the property yourself (ever)
❌ Rent to family members or related parties (residential)
❌ Buy from yourself or related parties (residential)
📊 Calculate Your Borrowing Capacity
SMSF loans have different criteria than personal loans. Get a sense of the numbers involved.
Calculate Borrowing Capacity →St George Properties Suited for SMSF Investment
Based on what I see working well for SMSF clients in our area:
Strong SMSF Investment Choices:
Units in Rockdale/Kogarah ($650K-$850K)
Townhouses in Bexley/Kingsgrove ($1.1M-$1.4M)
Commercial premises (if leasing to your business)
Challenging SMSF Purchases:
Waterfront Brighton-Le-Sands/Sans Souci houses ($2M+)
Development sites or unrenovated properties
The Real Costs of SMSF Property Investment
Too many clients focus on the property purchase without understanding ongoing costs.
One-Time Costs:
| Cost Item | Typical Range |
|---|---|
| Stamp duty (investor rate) | 4.5-5.5% of purchase price |
| Conveyancing | $1,500-$3,000 |
| Building & pest inspections | $500-$800 |
| SMSF setup (if new) | $1,500-$3,000 |
| Loan establishment | $500-$1,500 |
Annual Costs:
| Cost Item | Typical Range |
|---|---|
| SMSF audit | $500-$1,500 |
| SMSF accounting | $1,500-$3,500 |
| Property management | 5-8% of rent |
| Landlord insurance | $1,000-$2,000 |
| Council rates | $1,200-$2,500 |
| Strata (units) | $2,000-$6,000 |
| Land tax (if applicable) | Varies |
| Annual property valuation | $300-$600 |
The break-even question: Can your rental income cover loan repayments AND these costs? Negative gearing doesn't work the same way inside super—losses stay trapped in the fund.
🧮 Calculate Property Buying Costs
Understand the full purchase costs before committing your SMSF to a property acquisition.
Calculate Buying Costs →Minimum Fund Balance: How Much Do You Need?
Here's my practical guidance based on current lending requirements and prudent financial planning:
Minimum recommended SMSF balance: $300,000-$400,000
Why? Let's work through a Rockdale unit purchase:
That leaves limited room for other investments or emergencies. Most SMSF specialists recommend keeping 20-30% of your fund in liquid assets after property purchase.
Realistic minimum for St George property: $400,000+ fund balance
Safe Harbour Interest Rates 2025-26
When you borrow from a related party (e.g., family member loans to your SMSF), you must charge at least the ATO's safe harbour interest rate.
For 2025-26, these rates have decreased slightly:
Common Mistakes I See
After facilitating numerous SMSF property purchases across St George, here are the pitfalls:
Mistake 1: Insufficient liquidity Property is illiquid. If your SMSF needs cash for member benefits, pension payments, or emergencies, you can't quickly sell half a property.
Mistake 2: Inadequate documentation Every lease, every transaction, every valuation needs proper documentation. "We'll sort the paperwork later" leads to audit failures.
Mistake 3: Arm's length violations Renting below market rate to a "good tenant" who happens to be connected to a member. Paying a related party tradesperson above market rates. The ATO actively investigates these.
Mistake 4: Ignoring concentration risk Putting 80% of your retirement savings into a single Kogarah unit might feel safe because "property always goes up." But what if that building has structural issues? What if the area rezones unfavourably?
Mistake 5: Forgetting you can't live there I've seen clients buy a property intending to live there after retirement. You can't. The sole purpose test continues forever—you cannot roll the property out of the fund and into personal ownership without triggering CGT and potentially other issues.
The Decision Framework
SMSF property makes sense when:
Consider alternatives when:
Who You Need on Your Team
SMSF property investment isn't a DIY project. You'll need:
1. SMSF Specialist Accountant
2. Financial Adviser (SMSF-qualified)
3. Specialist SMSF Lawyer
4. Experienced Property Agent
5. SMSF-Experienced Mortgage Broker
Considering SMSF Property in St George?
I can provide realistic rental appraisals and identify suitable SMSF investment properties in our area.
Discuss SMSF Property Options →Frequently Asked Questions
Q: Can my SMSF buy a property I already own personally? No for residential property. You cannot sell your investment property to your SMSF. Commercial property has different rules—speak to your accountant.
Q: What happens when I reach retirement? The property can remain in the fund, generating income for your pension. You still can't live in it or rent it to related parties.
Q: Can I use my SMSF to help my kids buy a home? Absolutely not. This violates the sole purpose test and can result in the entire fund being taxed at 45%.
Q: What if the property is vacant for extended periods? Vacancy risk is real and impacts cash flow. Ensure your fund has sufficient liquidity to cover loan repayments during vacancies.
Q: Can I renovate an SMSF property? Minor cosmetic work is generally fine. Structural alterations that change the property's character typically aren't allowed while an LRBA exists.
This article provides general information only and does not constitute financial or legal advice. SMSF decisions should involve qualified professionals familiar with your specific circumstances. Michael Kalinovski is a licensed real estate agent specialising in St George property—for investment property appraisals, contact 0411 LAU 888.
Related Topics
Ready to Take the Next Step?
Whether you're buying, selling, or just curious about your property's value, I'm here to help.