Guidance for Buying a Property With Super

Investment property can be purchased using the proceeds from your superannuation, allowing you to work less in retirement and enjoy a more comfortable lifestyle. To get the most out of your investment, though, it’s best to seek professional guidance through what can be a complex and opaque procedure.

Where does the magic happen?

People still in the process of establishing their wealth often use their retirement savings as collateral for loans used to purchase real estate.

  • It can be a highly effective investment plan that receives favourable tax treatment if you are currently gainfully employed and concerned primarily with funding your retirement.
  • Simply put, it entails tapping into your retirement savings to cover the down payment on an investment property.
  • Over time, you can repay the loan with the rental income from the property and, perhaps, with future contributions to your retirement savings account.

When using retirement savings as collateral, borrowers must adhere to stringent restrictions. It’s not as simple as getting a mortgage; instead, you’ll need to set up an SMSF or self-managed super fund. Additionally, the structure of such an investment is tricky. If you want to make sure your investment is legal and in line with your long-term goals, consulting a financial advisor is a must.

Do you know of any more benefits?

Basically, buying a property with super has many benefits, the most obvious of which is that you get to put your money into something tangible. This form of investment may be more comfortable than others for some people. Possessing real estate is reassuring to many people because it is something they can physically hold in their hands.

You might use your current retirement savings as a down payment on investment property, using the rent and future superannuation contributions to pay off the loan and become the proud owner of a valuable asset that has likely been appreciated.

When do you start?

Using your retirement funds to purchase a home is unlike a conventional mortgage. In fact, buying a property with super requires adhering to a specific set of guidelines. Investing in a property that doesn’t match these requirements will result in no tax benefits.

Location of your possessions:

  • Buying from a relative is prohibited.
  • You or a relative cannot occupy or rent the property.
  • The borrowed funds may not be used for “improvement” (i.e., significant alterations) of the property but may be used for necessary repairs and upkeep.

You get a bit more leeway if you operate a firm. It’s possible to use your retirement savings to buy a place to work, and some landlords even accept rent payments made straight to a superannuation account.

How dangerous is it?

All investments carry some degree of uncertainty. You need to be aware of them to make a well-informed choice.

  • The most obvious threat is the common dangers related to borrowing. If you want to make sure your SMSF has enough cash on hand to make loan repayments and withstand any interest rate hikes, you need to invest correctly.
  • It can be challenging to wrap your head around your SMSF’s LRBA when purchasing an investment property. It’s wise to seek guidance from a reliable financial advisor with experience in this field.
  • Personal insurance, such as income protection, life insurance, and trauma cover, should be considered for the same reason. A well-thought-out insurance policy selection can make a difference in keeping your money safe. The money from your insurance policy may allow you to keep up with your loan payments even if you cannot work due to an injury or illness.


Investing in a commercial property with solid income can frequently completely (or significantly) alleviate the financial strain of establishing a Self-Managed Super Fund.

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