September 10, 2025 • 20 mins
In this episode of SMSF Insider, host Troy, founder of Blue Chip SMSF Services, reacts to different videos discussing the nuances of purchasing property through a self-managed super fund (SMSF). He highlights the option of using a 10% deposit and the implications of gearing up to 90%, emphasizing the aggressive nature of such a strategy. Troy explains that not everyone needs an SMSF, cautioning that many individuals may be misled regarding its necessity. He outlines the potential advantages of SMSFs, particularly in relation to purchasing commercial properties, and clarifies that while residential properties cannot be lived in or rented out to friends, commercial properties offer more flexibility for business use. Tune in for valuable insights into managing your SMSF and making informed investment decisions. Remember, this podcast does not constitute personal advice, so consult a licensed advisor before making any financial commitments.
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Please note: The information provided in this recording is for coaching and educational purposes only. It should not be considered personal financial advice. Everyone’s situation is different, so before acting on any of the content discussed, please seek independent financial advice tailored to your specific circumstances.
Timestamps:
00:00:00 - 00:00:00: Introduction
00:02:34 - SMSF and commercial property leasing
00:05:37 - SMSF owning commercial property
00:09:28 - SMSF property investment advantages
00:11:48 - Buying property with super funds
00:15:40 - Using super for property investment
00:18:25 - SMSF property investment benefits
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
when I talk about buying personal or under trust, is that you can go ahead
I'd be very mindful of gearing up to 90% within your SMSF,
You don't need a self-managed super fund and most people that have one
Wow. No, not everybody needs an SMSF, but
(00:25):
One way that we've used this over the years with clients is we've had the
SMSF purchase the property from the individual
SMSF can purchase a property from a trustee as
long as it is a business real property or it's a commercial building. With
this particular strategy though, there will be capital gains tax implications. So
welcome to SMSF Insider, where we help busy
(00:48):
professionals to gain financial independence using an SMSF. Hi,
I'm Troy, founder of Blue Chip SMSF Services. Now over the last
20 years, I've helped thousands of Aussies manage the complexities of
self-managed super funds. And in this podcast, I'll answer your questions, break
down the myths, so you can take charge of your financial freedom. Let's get
into it. Hey guys, just a quick disclaimer and just a reminder that
(01:08):
this is not personal advice, so make sure you speak with a licensed advisor
before making any investment decision. Hi guys, welcome to this
edition of SMSF Insider, where we'll be checking
If you buy a property in a super fund, if it's residential, you can't live
in it, you can't let your mates live in it, it's prohibited in there. But if you buy a commercial property
or a business property in a super fund, you can. So you can run your business premises there, your
(01:31):
retail operation there. I think that's where you go, well, if I've got a business premises, I
mean my workshop or my surgery or wherever it is, and I'm paying
rent to my stock because you've got to pay rent. So you as a mechanic or as a doctor or
your company pays rent to your own SIPA fund. On the one hand, you're getting a tax deduction
for that and your rates and so the company rates is 25%. The SIPA fund
gets that money in there, it's probably paying tax maximum of 15 on
(01:51):
the earnings of that money. So it's a pretty easy math to work here to make
you 10% or at least on the changeover. And then over time, you'll pay less
Very true. So when you're purchasing property through an SMSF, you
certainly can't live in it or you certainly can't have
a relative or friend live in it. It needs to be at an arm's length
transaction. But yes, when you are purchasing property like commercial or
(02:12):
industrial property, you can lease it back to
your business. If you're self-employed, you're a mechanic or you're a doctor and
you've got your own premises or a professional service provider,
then certainly your SMSF can purchase that property and
can lease that property. The business can lease that property from
your SMSF. Great strategy and we do see that quite a
(02:34):
Here's Henderingo's hot property tips. And today we are talking about
how I, as a business owner, can maximize my
investments while minimizing my tax, all legally, and how
you can use your superannuation to grow real wealth in a very tax effective
way. So this is Jack Henderson's Trading Entity. right
here. This is called Henderson. I am an employee of
(02:54):
Henderson. This is Jack here as a beautiful stick figure. Naturally
out of most entities, you pay yourself a salary and generally
you also have to rent a premises for people to work from. Hence the
reason we're recording this in a premises right now. As an employee or as an
entity, you pay an employee their salary. In this case, I've put
in 180,000 as a salary and every single
(03:15):
employee in Australia, if they get paid has to pay superannuation.
Okay? So keep that in mind. As a entity, like I said, you generally
pay rent to operate out of an office or
a building or whatever it is. And there's two things you have to be conscious of
here. When you are paying yourself a salary, if you're an employee of the entity.
Generally what most accountants will do was they'll only pay a salary or
(03:36):
as much as a salary as they need to the employee to keep the
tax rate similar to what you would pay within an entity. So you
pay 25 cents in the dollar inside of your trading entity. And most
accountants will pay you a salary where your blended tax rate falls around
about the 30% mark. So it was very similar to what you would pay within an entity and
you obviously pay your rent. Now this is where an SMSF or
(03:57):
superannuation comes in. Now, when you pay yourself a salary, let's assume you pay $180,000 as
a salary. Now there is a minimum amount of super that needs to be paid, which is actually
12 cents in the dollar at the moment, or 12% of
your salary. And that changes every financial year. But
there is a maximum that you can contribute into superannuation if
(04:21):
Yeah, so what Jack's talking about here is
contributions to Super and
certainly just now he's talking about concessional contributions being
30,000 per annum. So he's also talking
about an SMSF. I'll just jump right in and see what else he's getting to here.
Let's assume that we pay ourselves $180,000 as a
(04:44):
salary. 12% of $180,000 would be give
or take 20 to 22,000, which means we can contribute
an extra say $8,000 per annum to max out what
is known as a concessional contribution being $30,000 per
annum. Now, the cool thing about this is as your money goes into super, it
(05:06):
What Jack's talking about here is concessional contributions and
the current limit is $30,000 per annum and all concessional contributions
and it comes off your taxable income, where if
it was in this environment, it'd be taxed at 30 cents in the
dollar. So you can push $30,000 a year into your superannuation every
(05:27):
single year and be tax efficient from a personal point of view. On
top of that, if you, inside of your superannuation, own
So what Jack's talking about here is an SMSF owning a
premises if you're a business owner and then your business renting that
premises from your SMSF. Yeah, I think it's a great strategy. Instead
(05:48):
of paying rent, you actually own the property and you
have the uplift from the property gains over the
course of the time you're in that property. you
need to be somewhere anyway, you're only gonna be leasing, so instead of leasing
a property, it's a great strategy, you're getting the uplift and you're getting the
(06:10):
There's a very small list of assets that you may own personally that
you can either contribute to your superannuation fund or your super fund
can purchase from you. One that I wanna talk about today is commercial
property. So if you have yourself a superannuation fund and you've got
Certainly, an SMSF can purchase commercial property.
(06:40):
purchase the property from the individual members. So cash
comes out of the super fund, it goes to the individuals that own
the property, they end up with the cash in their name and the property
has moved into the self-managed super fund. In this particular example,
what the clients ended up doing is they used the money from the sale
of the property to then go and pay off their primary residence
(07:02):
What this clip's talking about is a SMSF purchasing
a property from a trustee. So a
SMSF can purchase a property from a trustee as
long as it is a business real property or it's a commercial building.
So in this particular scenario, he's
talking about the SMSF purchasing this commercial property and
(07:25):
then freeing up cash for the client to then use
that money to pay off their PPR. With
this particular strategy though, there will be capital gains tax
implications. So the SMSF is purchasing it. So the
existing entity that owned it will pay CGT and
also the SMSF will need to pay stamp duty. In
(07:48):
addition to that, you need to be mindful of there
are concessional and non-concessional caps. So you
need to make sure that the property that you're transferring into
The advantage of moving the property into the super fund meant that any rent that
was then earned, any future capital gains are in the super fund. Soon
(08:10):
enough, they're going to be pension age, superannuation pension age,
This is called an in-species transfer. You see this a lot with shares, and
certainly you can do it with property. As I mentioned,
it does trigger capital gains tax, it will trigger stamp
duty, and you also need to be mindful that you don't exceed the contribution
You don't need a self-managed super fund, and most people that have one
(08:36):
Well, no, not everybody needs an SMSF, but
there are some definitely some advantages of having one. And
certainly if you are purchasing property outs,
if you can't purchase any more property outside of Super and you
have very little exposure, then sometimes an SMSF is
(08:57):
a great way to have that exposure if your borrowing capacity has been maxed out
Now, this is not advice and I was never here. This never happened.
I encourage you to seek that advice out. But I will say that
a self-managed super fund is the only super fund that you
can use to buy residential property and the only fund that
(09:18):
Yeah, so exactly right. An SMSF is the only
entity you can use within Super to purchase
direct property and get lending. You can't do it with an industry fund, you
can't do it with a retail fund. An SMSF is the only entity
or SMSF or Superannuation entity you can use to
(09:39):
We believe that everyone should be investing into property, because
when you buy property, you combine your saving with the bank's money, which
Yeah, I agree. You can have the
strategy does work well, or we have seen clients that use this strategy over
many years. And certainly, when you combine property
(10:05):
Given that you can't access your super until you're old and because of
the tax deductions on offer outside of super, I
believe that most people should be looking to buy their property outside
of super in the first instance. Once you do that, your
Certainly, you should be increasing your wealth inside and outside of
(10:26):
super. If you're investing in property outside of super, you will
get the tax deductions if you're purchasing the property in your own name. But
certainly, that strategy does work well
then borrow against this equity to buy even more property or
other investments as well. Now, if you're going to own multiple properties
outside of super, you have to question whether you really need
(10:49):
to be buying another property inside your super as well,
Yeah, so what he's saying here is that you should be purchasing
multiple properties outside of Super. Yes, that's certainly
one strategy. And if you have that strategy, then yes,
maybe you don't need to be purchasing more property inside your SMSF. If
(11:13):
you don't hold any property outside of Super because your borrowing
capacity isn't high enough to purchase more property and
the only way to get more property in your overall portfolio is
through Super, then I think purchasing property through your SMSF
is still a great idea. Just quickly guys, if you're a busy professional
fed up with traditional super funds and overwhelmed by the setup of your
(11:35):
SMSF, we can help. Book in a call with my team using the link
in the show notes and let's build your future on your terms. Now,
Did you know that you can buy a property using your super without touching
Yes, certainly this is a strategy that's been around for
many years and it's not new. We've been
doing this strategy for over 10 years and we've
(11:58):
had a lot of clients, had a lot of success with this
Self-managed super fund. Instead of buying shares, you can buy a
property in your SMSF. Your super will be rolled over
into a fund where you can control and you're going to use that money as a deposit
(12:19):
and cost to buy an investment property. True. But
there are rules. The property must be for investment only. You
can't live in it or rent it to your family. Your SMSF will pay for
Yeah, certainly this is a strategy that works. It's not a strategy for everybody, but
it does work. We have been using it for many years, and it's
(12:42):
When I talk about buying personal or under trusts, is that you can
go ahead and use a 10% deposit, in some cases, even less than
that. But when it comes to super, it's usually about 20%. In
some circumstances, you still can do 10%. And it really depends on
I'd be very mindful of gearing up to 90% within
your SMSF. The rate is typically slightly higher with
(13:06):
an LRBA loan or a loan within super. But yeah,
certainly heading up to 90%, I'm
probably not providing advice, but it is a fairly aggressive strategy.
is that you need a 20% deposit. And the other
big difference is you can't leverage the equity from one property
(13:28):
Yeah, so when you are purchasing a property
through super, one thing you can't do is once you have gained
equity in that property, you can't then go and use that equity to
then go and purchase more property. So it
is a little bit restrictive in that regard, but however, it is better
So if you were to purchase under your personal, you've got a property or
(13:52):
your principal place of residence, as it goes up in value, you have some
equity there. You could use that equity as a deposit for your next property. It
makes it a lot easier to build wealth. In your super fund, you can't
do that. So if your property grows in value and has equity, you
can't extract that to purchase another property. And that's why these really rich
people are going and investing in multiple assets rather
(14:12):
than just plugging all of their money into the one property, because it gets stuck.
There was a few lenders previously that had like an
offset facility within their loans offerings.
With additional contributions going into the fund, you could have that in the offset facility.
And then once those funds had accumulated
enough to purchase another property, then you could actually use
(14:34):
those funds to purchase another property. I don't
know if there's anyone doing those offset facilities anymore, but certainly
that was one way about having more than
These are the top 10 mistakes when buying a property in SMSF for
bloody newbies. And if you're a noob, you might be asking, what is a SMSF?
(14:55):
It is a self-managed super fund, noob. And before I
draw out the 10 tips, here's how a SMSF buying property
works. So to set up the premise of this SMSF purchase, for
example, there's a couple, husband and wife or husband and husband, I didn't really
care. You guys work full-time, for example, combined
income is $250,000. And you've been working PAYG for
(15:16):
the last 10 years, a salaried job, and you guys have
a super paid into a retail fund, for example, Hester
or MLC or whatever. And let's say your combined super between
both of you guys is about $200,000 in the superannuation account.
And it's important to talk about the trigger point here. Why would someone use
their super to buy property? Well, usually it's when you have maxed
(15:39):
out your borrowing capacity in your personal level. For example, your income
and your liability, the bank has no more lending for you, but then you
still want to buy another property for investment purposes. And say you have
a financial planner or a financial advisor or accountant and go, hey, you know,
you can actually use your retail super and transfer it
into a self-managed super fund, which you can run to use this
(16:01):
This particular guy is talking about purchasing property through
an SMSF and doing it once you've
maxed out your borrowing capacity outside of Super. So something we've
Top 10 mistakes and pay attention. Mistake number one is
not meeting the sole purpose test. So you might be asking, what is the sole
(16:22):
purpose test then? Well, you have SMSF fund right now, right? Well,
Yeah, so sole purpose test is it must, the
investment must benefit all members of the super fund. It's
spouse and yourself and also your kids, the beneficiaries. And
then the sole purpose test is to provide retirement benefits for
(16:42):
these members under it. And the common breaches of this are,
for example, you buy a holiday house and you guys live
in it. So you're actually deriving benefits before retirement,
which is a no-no. Or maybe you buy the property under
here is talking about purchasing a property through Super and
(17:04):
using it as a holiday home or having a relative live in it. That
And common mistake number two is you do not have any strategy in terms of
your SMSF. And the reason I know that is you cooked up the SMSF strategy with
no financial planner help which means you have no statement of advice from
the planner in terms of the advice given to open an SMSF to buy
(17:25):
a property. And the reason you have an SMSF set up in the first place without a
financial planner is because you clicked on some YouTube ad that led to some
property guru who's basically a spruiker. And then they give
you this diamond nickel talk which is, oh, you don't need that much
So yeah, he's talking about anyone setting up
a property by clicking
(17:48):
on an ad on YouTube and someone trying
to spruik a property and doing
that setting up an SMSF to purchase property.
So not every SMSF though, you don't
need to have a statement of advice to set up an SMSF. However, if
you are requiring personal advice, then most certainly you
(18:13):
Do you want to sell your investment property completely tax-free or
would you rather get taxed at 47%? If you
chose to get taxed at 47%, I unfortunately cannot help
But if you're wanting to sell your investment... So here, this
guy is talking about purchasing property outside of super
versus purchasing property inside of super. So when you're purchasing property
(18:36):
inside of super, there's some major tax concessions. If
you hold the property for longer than 12 months, which you probably should be, then
you'll be taxed at 10%, but if you hold the property all
the way through to retirement age or pension phase, then there
So what you can do is open up a self-managed super fund. You
(18:57):
can open it up with your spouse. You can open up with a couple of friends. What
this will allow you to do is purchase the investment property. And if you hold that
investment property all the way up until age 60, you can
sell that completely tax-free. Now, if you are looking to purchase an
investment property, the first thing I'd be looking at is to figure
out what entity to purchase it through. If you purchase it through
(19:20):
So this guy's talking about purchasing property through an
SMSF and the benefits of doing so. Do I agree with the
strategy? Yes, I think the strategy works. It's not for everybody,
but certainly it is a strategy that we've seen for many,
many years. And certainly, the strategy
does work. You will need to take a long-term view. It is property, and
(19:43):
it is superannuation. So when you are investing within
super, you typically need to be taking a long-term view anyway. But
certainly, seek financial advice before making any
investment decisions. Okay guys, thanks for listening. Thanks
for tuning in to SMSF Insider, where
today we looked at some reactions for everything
(20:05):
to do with SMSFs and property with inside SMSFs. If
you have some comments or there's something you'd like us to talk about, please drop a comment
in the comment section below. Thanks for tuning in. Thanks for tuning in
to this episode of SMSF Insider. If you got value from this,
make sure you subscribe so you never miss the strategies we share to
help you take control of your financial future. Find us on socials at blue
(20:26):
chip SMSF or book a call with our team to see if
when I talk about buying personal or under trust, is that you can go ahead
I'd be very mindful of gearing up to 90% within your SMSF,
You don't need a self-managed super fund and most people that have one
Wow. No, not everybody needs an SMSF, but
(00:25):
One way that we've used this over the years with clients is we've had the
SMSF purchase the property from the individual
SMSF can purchase a property from a trustee as
long as it is a business real property or it's a commercial building. With
this particular strategy though, there will be capital gains tax implications. So
welcome to SMSF Insider, where we help busy
(00:48):
professionals to gain financial independence using an SMSF. Hi,
I'm Troy, founder of Blue Chip SMSF Services. Now over the last
20 years, I've helped thousands of Aussies manage the complexities of
self-managed super funds. And in this podcast, I'll answer your questions, break
down the myths, so you can take charge of your financial freedom. Let's get
into it. Hey guys, just a quick disclaimer and just a reminder that
(01:08):
this is not personal advice, so make sure you speak with a licensed advisor
before making any investment decision. Hi guys, welcome to this
edition of SMSF Insider, where we'll be checking
If you buy a property in a super fund, if it's residential, you can't live
in it, you can't let your mates live in it, it's prohibited in there. But if you buy a commercial property
or a business property in a super fund, you can. So you can run your business premises there, your
(01:31):
retail operation there. I think that's where you go, well, if I've got a business premises, I
mean my workshop or my surgery or wherever it is, and I'm paying
rent to my stock because you've got to pay rent. So you as a mechanic or as a doctor or
your company pays rent to your own SIPA fund. On the one hand, you're getting a tax deduction
for that and your rates and so the company rates is 25%. The SIPA fund
gets that money in there, it's probably paying tax maximum of 15 on
(01:51):
the earnings of that money. So it's a pretty easy math to work here to make
you 10% or at least on the changeover. And then over time, you'll pay less
Very true. So when you're purchasing property through an SMSF, you
certainly can't live in it or you certainly can't have
a relative or friend live in it. It needs to be at an arm's length
transaction. But yes, when you are purchasing property like commercial or
(02:12):
industrial property, you can lease it back to
your business. If you're self-employed, you're a mechanic or you're a doctor and
you've got your own premises or a professional service provider,
then certainly your SMSF can purchase that property and
can lease that property. The business can lease that property from
your SMSF. Great strategy and we do see that quite a
(02:34):
Here's Henderingo's hot property tips. And today we are talking about
how I, as a business owner, can maximize my
investments while minimizing my tax, all legally, and how
you can use your superannuation to grow real wealth in a very tax effective
way. So this is Jack Henderson's Trading Entity. right
here. This is called Henderson. I am an employee of
(02:54):
Henderson. This is Jack here as a beautiful stick figure. Naturally
out of most entities, you pay yourself a salary and generally
you also have to rent a premises for people to work from. Hence the
reason we're recording this in a premises right now. As an employee or as an
entity, you pay an employee their salary. In this case, I've put
in 180,000 as a salary and every single
(03:15):
employee in Australia, if they get paid has to pay superannuation.
Okay? So keep that in mind. As a entity, like I said, you generally
pay rent to operate out of an office or
a building or whatever it is. And there's two things you have to be conscious of
here. When you are paying yourself a salary, if you're an employee of the entity.
Generally what most accountants will do was they'll only pay a salary or
(03:36):
as much as a salary as they need to the employee to keep the
tax rate similar to what you would pay within an entity. So you
pay 25 cents in the dollar inside of your trading entity. And most
accountants will pay you a salary where your blended tax rate falls around
about the 30% mark. So it was very similar to what you would pay within an entity and
you obviously pay your rent. Now this is where an SMSF or
(03:57):
superannuation comes in. Now, when you pay yourself a salary, let's assume you pay $180,000 as
a salary. Now there is a minimum amount of super that needs to be paid, which is actually
12 cents in the dollar at the moment, or 12% of
your salary. And that changes every financial year. But
there is a maximum that you can contribute into superannuation if
(04:21):
Yeah, so what Jack's talking about here is
contributions to Super and
certainly just now he's talking about concessional contributions being
30,000 per annum. So he's also talking
about an SMSF. I'll just jump right in and see what else he's getting to here.
Let's assume that we pay ourselves $180,000 as a
(04:44):
salary. 12% of $180,000 would be give
or take 20 to 22,000, which means we can contribute
an extra say $8,000 per annum to max out what
is known as a concessional contribution being $30,000 per
annum. Now, the cool thing about this is as your money goes into super, it
(05:06):
What Jack's talking about here is concessional contributions and
the current limit is $30,000 per annum and all concessional contributions
and it comes off your taxable income, where if
it was in this environment, it'd be taxed at 30 cents in the
dollar. So you can push $30,000 a year into your superannuation every
(05:27):
single year and be tax efficient from a personal point of view. On
top of that, if you, inside of your superannuation, own
So what Jack's talking about here is an SMSF owning a
premises if you're a business owner and then your business renting that
premises from your SMSF. Yeah, I think it's a great strategy. Instead
(05:48):
of paying rent, you actually own the property and you
have the uplift from the property gains over the
course of the time you're in that property. you
need to be somewhere anyway, you're only gonna be leasing, so instead of leasing
a property, it's a great strategy, you're getting the uplift and you're getting the
(06:10):
There's a very small list of assets that you may own personally that
you can either contribute to your superannuation fund or your super fund
can purchase from you. One that I wanna talk about today is commercial
property. So if you have yourself a superannuation fund and you've got
Certainly, an SMSF can purchase commercial property.
(06:40):
purchase the property from the individual members. So cash
comes out of the super fund, it goes to the individuals that own
the property, they end up with the cash in their name and the property
has moved into the self-managed super fund. In this particular example,
what the clients ended up doing is they used the money from the sale
of the property to then go and pay off their primary residence
(07:02):
What this clip's talking about is a SMSF purchasing
a property from a trustee. So a
SMSF can purchase a property from a trustee as
long as it is a business real property or it's a commercial building.
So in this particular scenario, he's
talking about the SMSF purchasing this commercial property and
(07:25):
then freeing up cash for the client to then use
that money to pay off their PPR. With
this particular strategy though, there will be capital gains tax
implications. So the SMSF is purchasing it. So the
existing entity that owned it will pay CGT and
also the SMSF will need to pay stamp duty. In
(07:48):
addition to that, you need to be mindful of there
are concessional and non-concessional caps. So you
need to make sure that the property that you're transferring into
The advantage of moving the property into the super fund meant that any rent that
was then earned, any future capital gains are in the super fund. Soon
(08:10):
enough, they're going to be pension age, superannuation pension age,
This is called an in-species transfer. You see this a lot with shares, and
certainly you can do it with property. As I mentioned,
it does trigger capital gains tax, it will trigger stamp
duty, and you also need to be mindful that you don't exceed the contribution
You don't need a self-managed super fund, and most people that have one
(08:36):
Well, no, not everybody needs an SMSF, but
there are some definitely some advantages of having one. And
certainly if you are purchasing property outs,
if you can't purchase any more property outside of Super and you
have very little exposure, then sometimes an SMSF is
(08:57):
a great way to have that exposure if your borrowing capacity has been maxed out
Now, this is not advice and I was never here. This never happened.
I encourage you to seek that advice out. But I will say that
a self-managed super fund is the only super fund that you
can use to buy residential property and the only fund that
(09:18):
Yeah, so exactly right. An SMSF is the only
entity you can use within Super to purchase
direct property and get lending. You can't do it with an industry fund, you
can't do it with a retail fund. An SMSF is the only entity
or SMSF or Superannuation entity you can use to
(09:39):
We believe that everyone should be investing into property, because
when you buy property, you combine your saving with the bank's money, which
Yeah, I agree. You can have the
strategy does work well, or we have seen clients that use this strategy over
many years. And certainly, when you combine property
(10:05):
Given that you can't access your super until you're old and because of
the tax deductions on offer outside of super, I
believe that most people should be looking to buy their property outside
of super in the first instance. Once you do that, your
Certainly, you should be increasing your wealth inside and outside of
(10:26):
super. If you're investing in property outside of super, you will
get the tax deductions if you're purchasing the property in your own name. But
certainly, that strategy does work well
then borrow against this equity to buy even more property or
other investments as well. Now, if you're going to own multiple properties
outside of super, you have to question whether you really need
(10:49):
to be buying another property inside your super as well,
Yeah, so what he's saying here is that you should be purchasing
multiple properties outside of Super. Yes, that's certainly
one strategy. And if you have that strategy, then yes,
maybe you don't need to be purchasing more property inside your SMSF. If
(11:13):
you don't hold any property outside of Super because your borrowing
capacity isn't high enough to purchase more property and
the only way to get more property in your overall portfolio is
through Super, then I think purchasing property through your SMSF
is still a great idea. Just quickly guys, if you're a busy professional
fed up with traditional super funds and overwhelmed by the setup of your
(11:35):
SMSF, we can help. Book in a call with my team using the link
in the show notes and let's build your future on your terms. Now,
Did you know that you can buy a property using your super without touching
Yes, certainly this is a strategy that's been around for
many years and it's not new. We've been
doing this strategy for over 10 years and we've
(11:58):
had a lot of clients, had a lot of success with this
Self-managed super fund. Instead of buying shares, you can buy a
property in your SMSF. Your super will be rolled over
into a fund where you can control and you're going to use that money as a deposit
(12:19):
and cost to buy an investment property. True. But
there are rules. The property must be for investment only. You
can't live in it or rent it to your family. Your SMSF will pay for
Yeah, certainly this is a strategy that works. It's not a strategy for everybody, but
it does work. We have been using it for many years, and it's
(12:42):
When I talk about buying personal or under trusts, is that you can
go ahead and use a 10% deposit, in some cases, even less than
that. But when it comes to super, it's usually about 20%. In
some circumstances, you still can do 10%. And it really depends on
I'd be very mindful of gearing up to 90% within
your SMSF. The rate is typically slightly higher with
(13:06):
an LRBA loan or a loan within super. But yeah,
certainly heading up to 90%, I'm
probably not providing advice, but it is a fairly aggressive strategy.
is that you need a 20% deposit. And the other
big difference is you can't leverage the equity from one property
(13:28):
Yeah, so when you are purchasing a property
through super, one thing you can't do is once you have gained
equity in that property, you can't then go and use that equity to
then go and purchase more property. So it
is a little bit restrictive in that regard, but however, it is better
So if you were to purchase under your personal, you've got a property or
(13:52):
your principal place of residence, as it goes up in value, you have some
equity there. You could use that equity as a deposit for your next property. It
makes it a lot easier to build wealth. In your super fund, you can't
do that. So if your property grows in value and has equity, you
can't extract that to purchase another property. And that's why these really rich
people are going and investing in multiple assets rather
(14:12):
than just plugging all of their money into the one property, because it gets stuck.
There was a few lenders previously that had like an
offset facility within their loans offerings.
With additional contributions going into the fund, you could have that in the offset facility.
And then once those funds had accumulated
enough to purchase another property, then you could actually use
(14:34):
those funds to purchase another property. I don't
know if there's anyone doing those offset facilities anymore, but certainly
that was one way about having more than
These are the top 10 mistakes when buying a property in SMSF for
bloody newbies. And if you're a noob, you might be asking, what is a SMSF?
(14:55):
It is a self-managed super fund, noob. And before I
draw out the 10 tips, here's how a SMSF buying property
works. So to set up the premise of this SMSF purchase, for
example, there's a couple, husband and wife or husband and husband, I didn't really
care. You guys work full-time, for example, combined
income is $250,000. And you've been working PAYG for
(15:16):
the last 10 years, a salaried job, and you guys have
a super paid into a retail fund, for example, Hester
or MLC or whatever. And let's say your combined super between
both of you guys is about $200,000 in the superannuation account.
And it's important to talk about the trigger point here. Why would someone use
their super to buy property? Well, usually it's when you have maxed
(15:39):
out your borrowing capacity in your personal level. For example, your income
and your liability, the bank has no more lending for you, but then you
still want to buy another property for investment purposes. And say you have
a financial planner or a financial advisor or accountant and go, hey, you know,
you can actually use your retail super and transfer it
into a self-managed super fund, which you can run to use this
(16:01):
This particular guy is talking about purchasing property through
an SMSF and doing it once you've
maxed out your borrowing capacity outside of Super. So something we've
Top 10 mistakes and pay attention. Mistake number one is
not meeting the sole purpose test. So you might be asking, what is the sole
(16:22):
purpose test then? Well, you have SMSF fund right now, right? Well,
Yeah, so sole purpose test is it must, the
investment must benefit all members of the super fund. It's
spouse and yourself and also your kids, the beneficiaries. And
then the sole purpose test is to provide retirement benefits for
(16:42):
these members under it. And the common breaches of this are,
for example, you buy a holiday house and you guys live
in it. So you're actually deriving benefits before retirement,
which is a no-no. Or maybe you buy the property under
here is talking about purchasing a property through Super and
(17:04):
using it as a holiday home or having a relative live in it. That
And common mistake number two is you do not have any strategy in terms of
your SMSF. And the reason I know that is you cooked up the SMSF strategy with
no financial planner help which means you have no statement of advice from
the planner in terms of the advice given to open an SMSF to buy
(17:25):
a property. And the reason you have an SMSF set up in the first place without a
financial planner is because you clicked on some YouTube ad that led to some
property guru who's basically a spruiker. And then they give
you this diamond nickel talk which is, oh, you don't need that much
So yeah, he's talking about anyone setting up
a property by clicking
(17:48):
on an ad on YouTube and someone trying
to spruik a property and doing
that setting up an SMSF to purchase property.
So not every SMSF though, you don't
need to have a statement of advice to set up an SMSF. However, if
you are requiring personal advice, then most certainly you
(18:13):
Do you want to sell your investment property completely tax-free or
would you rather get taxed at 47%? If you
chose to get taxed at 47%, I unfortunately cannot help
But if you're wanting to sell your investment... So here, this
guy is talking about purchasing property outside of super
versus purchasing property inside of super. So when you're purchasing property
(18:36):
inside of super, there's some major tax concessions. If
you hold the property for longer than 12 months, which you probably should be, then
you'll be taxed at 10%, but if you hold the property all
the way through to retirement age or pension phase, then there
So what you can do is open up a self-managed super fund. You
(18:57):
can open it up with your spouse. You can open up with a couple of friends. What
this will allow you to do is purchase the investment property. And if you hold that
investment property all the way up until age 60, you can
sell that completely tax-free. Now, if you are looking to purchase an
investment property, the first thing I'd be looking at is to figure
out what entity to purchase it through. If you purchase it through
(19:20):
So this guy's talking about purchasing property through an
SMSF and the benefits of doing so. Do I agree with the
strategy? Yes, I think the strategy works. It's not for everybody,
but certainly it is a strategy that we've seen for many,
many years. And certainly, the strategy
does work. You will need to take a long-term view. It is property, and
(19:43):
it is superannuation. So when you are investing within
super, you typically need to be taking a long-term view anyway. But
certainly, seek financial advice before making any
investment decisions. Okay guys, thanks for listening. Thanks
for tuning in to SMSF Insider, where
today we looked at some reactions for everything
(20:05):
to do with SMSFs and property with inside SMSFs. If
you have some comments or there's something you'd like us to talk about, please drop a comment
in the comment section below. Thanks for tuning in. Thanks for tuning in
to this episode of SMSF Insider. If you got value from this,
make sure you subscribe so you never miss the strategies we share to
help you take control of your financial future. Find us on socials at blue
(20:26):
chip SMSF or book a call with our team to see if
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