You can use your SMSF to buy residential or commercial property. However, any property held by your SMSF must meet the sole purpose test of providing retirement benefits to fund members, or a benefit to their dependants if a member dies before retirement.
- Residential property: there is nothing to prevent an SMSF from investing in residential property as long as the property is not acquired from a related party of a member.
- However, the family home cannot be owned by your super fund. Nor can you rent a residential property owned by your SMSF to a fund member, or to their related parties.
- However, you can buy an investment property of your choice that you rent out to tenants who are not fund members or their relatives.
- Commercial property: you can also hold commercial property, including your own business premises, in your SMSF.
While the property still needs to meet the sole purpose test, when dealing with commercial property, an SMSF can generally purchase the property and lease it back to a member or a related party of the fund – including the member’s business.
An arm’s length sale price and lease arrangement will be particularly important when acquiring and / or leasing property to a member or related party of the fund.