SMSF Investment Property Rules

SMSF Investment Property Rules

SMSF (Self Managed Super Fund) is a way of saving financial assets for retirement. Growing number of Australians decide to set up own self managed super fund mainly due to one reason – full control over the investments. But this freedom comes at a price as ATO imposes strict SMSF regulations which must be followed. If not in compliance, members of SMSF are penalized. ATO regulations imply that:

  • SMSF can be started by a single member or a group of maximum five members.
  • Every member also acts as trustee of the fund.
  • Fund assets cannot be used before the retirement. There are strict rules that regulate this conditions unless in a case of member’s death.
  • Certain sum of money is required for setting up an SMSF.

Before setting a self managed super fund, you need to determine:

  • whether you are capable of running the fund on your own, or need professional help;

Self managed super funds property investment is the most common type of investment. However, although most preferred, does not mean it is the easiest as certain rules apply. The smsf investment property strategy must be stated in a trust deed and must provide financial benefits for all the members of the fund. There are also other more important rules defined by ATO that apply to the self managed super funds property investment, that must be followed.

  • Define self managed super funds property investment

Before deciding on any smsf investment property, you together with other members of the fund, must define a clear strategy and objectives of the investment. Consider the circumstances and opinions of all members.

  • Self managed super funds property investment can be made for residential property only

You and other fund members will not be allowed to use smsf investment property for personal use. This means that according to the law, you can only invest in residential property. The use of this property must be separated from your personal or business investments.