Self-managed super funds (SMSFs) now make up almost 30% of all superannuation assets in Australia — and this number is set to rise. As more Australians look for greater control and flexibility with their retirement savings, buying property through an SMSF is becoming an increasingly popular investment strategy.
If you’re considering investing in property with your super, here’s what you need to know about SMSF loans and how Dash Money can help.
An SMSF loan is a specialised property loan that allows an SMSF to borrow money to purchase an investment property. It works similarly to a traditional investment loan but is specifically structured for super funds.
When you take out an SMSF property loan, the property is initially held in a custodian trust until the loan is repaid. Once the loan is cleared, the ownership title is transferred to the SMSF. Throughout the loan term, members of the SMSF maintain a beneficial interest in the property, and any rental income must be reinvested into the fund to help grow its value.
To comply with Australian Tax Office (ATO) regulations, the investment must meet the sole purpose test — meaning the property must solely provide retirement benefits to fund members.
The process of securing an SMSF loan involves providing several documents and financial records, including:
SMSF trust deed
Custodian (bare) trust deed
Contract of sale
Personal income verification
SMSF bank statements
SMSF tax returns and audit certifications
Rental income estimates (if available)
Lenders use this information to ensure your fund can service the loan repayments comfortably without placing your retirement savings at risk.
For example, Dash Money’s SMSF Investor Loan can lend up to 70% of the property’s value for residential investment properties. This means the SMSF needs to have enough liquidity to cover the deposit (at least 30%) plus any associated purchase costs such as stamp duty and legal fees.
Investing in property through your SMSF offers a range of potential advantages:
Diversification: Property investment provides exposure to a tangible asset class, spreading your SMSF’s risk across different investments.
Capital growth and rental income: Property can deliver both regular rental income and long-term capital growth, boosting your super balance.
Control: SMSF trustees can choose the exact asset they want to invest in, tailoring the fund's strategy to their personal retirement goals.
Many Australians prefer residential and commercial property investments because they offer something tangible and historically strong returns compared to other assets.
While there are significant benefits, it’s important to understand the risks involved with SMSF property loans:
Limited recourse: Under a limited recourse borrowing arrangement (LRBA), if the loan defaults, the lender can only claim against the property, not other SMSF assets.
Compliance obligations: SMSFs must strictly adhere to complex regulations around property purchases, tenant arrangements, and fund management.
Financial risks: Like any property investment, market downturns, tenant vacancies, or unexpected expenses can impact your fund’s value.
Setting up an SMSF to purchase property is a major decision. You should always seek advice from a qualified financial adviser to ensure it’s the right strategy for your personal circumstances and long-term goals.
At Dash Money, we specialise in helping SMSF borrowers invest in property with confidence. Whether you're looking to diversify your existing SMSF portfolio or purchase your first property through super, we offer flexible SMSF loan solutions tailored to your needs.
If you’d like to learn more about SMSF loans, or if you're ready to get started, contact the Dash Money team today.
If you are looking to add to your portfolio and want to purchase property through your SMSF, reach out to a Dash Money Lending Specialist today.