A self-managed super fund can hold property, including through a limited recourse borrowing arrangement. It can also be an expensive way to learn about compliance, so the checks come before the search.
First, the fund needs a documented investment strategy that permits direct property, and the trustees need to be confident the fund can meet its liquidity obligations — pensions, fees, tax and loan repayments — without forced asset sales.
Second, the borrowing structure has to be right. An LRBA requires a separate bare trust to hold the asset, with the fund holding a beneficial interest. The lender's recourse is limited to that asset, which is why the structure is prescribed so tightly.
Third, the property must be eligible. Residential property cannot be acquired from a related party, and the asset can't be improved with borrowed funds, lived in by members, or leased to related parties on non-commercial terms. Commercial property has more flexibility.
Finally, the paperwork matters as much as the property. Auditors will ask for the trust deed, the loan agreement, the valuation, the lease and the fund's records. Set the file up properly at the start and the annual audit becomes routine. Speak to a licensed financial adviser, tax agent and solicitor before proceeding.
Information on this website is general in nature and is not personal financial, tax, legal or credit advice. It does not take into account your objectives, financial situation or needs. Property through a self-managed super fund involves significant compliance obligations. Obtain licensed financial, tax and legal advice before establishing an SMSF or acquiring property through one.