SMSF and Property

What properties a SMSF can buy?
A SMSF can purchase the following property related investments:

• Residential property
• Commercial property
• Industrial property
• Overseas property
• Units in listed/unlisted property trusts
• Property partnerships with non-related parties
• Off-the-plan properties
• Options to purchase off-the-plan properties

The SMSF can purchase a property with or without borrowed funds. When the SMSF borrows from bank or related parties, the loan must be limited recourse.

What properties a SMSF cannot buy:
A SMSF is unable to invest certain property investments that SISA does not allow:

• Residential property from a related party
• Property with full recourse loan
• Property partnerships with related party

The acquisition of the above will breach the in-house asset rule and fail the sole purpose test, therefore they are prohibited by SISA.

What properties investments can transfer to a SMSF:

• Commercial property
• Industrial property

Note a residential property can only be bought by a SMSF. If it has been already bought outside of the SMSF, it cannot be transferred to the SMSF.