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5 Benefits of Buying an Investment Property through a SMSF

For some investors, the potential savings from buying an investment property through a self-managed super fund can outweigh the cost and complexity of administering the fund. The low-interest rates have made investment property an attractive option for SMSF investors.

There are a few main reasons you would consider purchasing a property through an SMSF. You may be looking for a passive investment that can generate good returns, or you may want to utilise the power of leverage to increase your investment.

If you’re still on the fence about purchasing a property through your SMSF, then here is a breakdown of the benefits you can reap with this approach:

Why It Can Be Worth Getting an Investment Property with a Self-Managed Super Fund

Benefit #1: Tax-Effective 

Expenses associated with owning an investment property, such as maintenance costs, are tax-deductible. After these expenses are deducted, any income generated from the property will be taxed at only a 15% tax rate, which is significantly lower than the 32.5% and 37% marginal tax rates for most individuals.

Benefit #2: Business Opportunities

SMSFs can purchase property to carry on a business, including the rental of property. Property purchased and rented out can be a regular source of income for the fund, which can be significant depending on the property’s rental yields. This means you can enjoy business tax deductions and a steady income stream.

Benefit #3: Boosted Purchasing Power

Many investors have found that they can borrow more funds to partake in an investment property purchase through an SMSF. This is a significant benefit in this low-interest-rate environment, where many investors would not have been able to purchase an investment property without leveraging their SMSF capital to increase their purchasing power.

Benefit #4: Lower Capital Gains Tax

Capital gains tax is levied on investment properties held for more than 12 months. Generally, a CGT rate of 10% is applied to gains from non-business assets. However, if you purchased the property on or after 20 September 1985 and held it for at least 12 months, you are entitled to exclude any capital gain you make. This is only for the portion of the capital gain that would otherwise be taxed at the individual’s marginal tax rate.

Benefit #5: More Control of Your Investment Portfolio

The self-managed super fund structure enables the fund to act as a separate entity to the investor. Using a self-managed super fund allows flexibility that is unavailable to managed funds or other institutional investors. You can control your investment portfolio as you see fit and make decisions such as when to sell or purchase property with your whole direction.

The Bottom Line: Knowing if Purchasing an Investment Property through an SMSF is the Right Move for You

Purchasing an investment property through an SMSF is a significant decision and should not be taken lightly.

If you’re considering going down this path, talk to your financial adviser to understand your options and undertake your due diligence before committing to a purchase.


Handling finances can be tricky for many people; setting aside your income for retirement, savings, monthly expenses, or other investments to build your wealth. But we can take the guesswork out of your monetary struggles with our expert financial advice team based in Newcastle as we take a tailored approach to your unique needs and goals.

If you’re at a loss with retirement planning, superannuation, and more, book a  meeting with the Newcastle Financial Planning Group financial advisers! Let’s talk about what we can do to help you achieve financial success and security.

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