FLI Group Explains What Every Australian Needs to Know Before Investing Their Super in Property

Seven Hills NSW — With property remaining a cornerstone of Australian wealth-building, many Australians are exploring how to expand their investment portfolios through their Self-Managed Super Fund (SMSF). One question comes up time and time again: “Can I buy a residential property from my SMSF?”

According to FLI Group, a leading financial services provider specialising in SMSF and finance strategies, the answer is yes — but with critical restrictions and responsibilities that every trustee must understand before making a move.

The Rules: What You Can Do

Yes, an SMSF can purchase residential property — but only under strict rules set out by the Australian Taxation Office (ATO). These rules ensure that the fund is used solely for retirement purposes, not for personal benefit before that time.

Some of the key rules include:

The property must meet the sole purpose test. It must provide retirement benefits to members.

You cannot live in the property while it's owned by your SMSF — nor can any related party (such as family members).

You cannot buy a property you or a related party already own.

All transactions must be at arm’s length — that is, conducted on commercial terms, as if between strangers.

“These rules are in place to prevent SMSF misuse and protect long-term retirement outcomes,” says the SMSF team at FLI Group. “But they also create opportunity when properly managed.”

What You Can’t Do

While the idea of holding property in a super fund is appealing, FLI Group warns investors to never assume it works like a regular investment.

Some common traps to avoid:

You cannot use the SMSF to buy a holiday home or an investment you plan to move into.

You can’t rent it to yourself, your children, or any business entity related to you.

You can’t renovate the property in a way that uses borrowed money (if finance is involved) beyond basic maintenance.

Violations may result in major penalties, trustee disqualification, and even loss of concessional tax benefits.

What About Borrowing?

Yes, your SMSF can borrow to buy a property through a legal structure called a Limited Recourse Borrowing Arrangement (LRBA). This enables the SMSF to borrow funds from a lender, using the property as security — but with limited recourse to other fund assets.

FLI Group specialises in setting up SMSF loans that comply with ATO regulations, including:

Structuring the bare trust or holding trust

Ensuring the loan agreement is compliant

Liaising with lenders who understand SMSF lending rules

“We’ve seen too many investors run into trouble because they tried to do it all themselves,” says FLI Group. “Getting the structure right from the start is essential.”

Why Consider Property in Your SMSF?

Despite the red tape, buying property in an SMSF offers many potential benefits, including:

Tax-effective growth — 15% tax in accumulation phase, 0% in pension phase

Greater control over retirement assets

Asset diversification away from volatile markets

Long-term rental income into your super fund

For savvy investors with the right guidance, it can be a powerful retirement strategy — especially when paired with professional support like that provided by FLI Group.

How FLI Group Helps

As an expert in SMSF structuring, borrowing, and compliance, FLI Group provides end-to-end support for trustees looking to invest in residential property. Services include:

SMSF establishment and compliance checks

SMSF finance and LRBA structuring

Property purchase due diligence

Ongoing fund administration and tax support

“We simplify the process, ensure compliance, and help our clients invest with confidence,” the company says. “Our goal is to grow your future wealth — safely and strategically.”

To learn more about how to invest in property using your SMSF, visit https://fligroup.com.au/ or contact us at [email protected]

About FLI Group

FLI Group is an Australian-owned financial services firm that provides tailored solutions in SMSF strategies, asset and equipment finance, and business lending. With a focus on education, empowerment, and smart structuring, FLI Group helps clients achieve long-term financial growth with clarity and compliance.