Background: Tania’s SMSF Property Journey

A decade ago, Tania stumbled upon a charming spot in Tweed Heads, right on the edge of New South Wales, almost brushing the Queensland border. She fell in love with it instantly but faced a hurdle – her savings fell short of the price tag. Not one to give up on her dream, Tania came up with a clever solution. She teamed up with her Self-Managed Super Fund (SMSF) to buy the property, blending personal aspiration with savvy investment.

They split ownership, with Tania taking a 40% stake and her SMSF covering the bulk at 60%. Tania’s strategy was more than just securing a lovely spot; it was about broadening her SMSF’s investment horizons and tapping into the potential uplift in the property market.

SMSF Property


In a recent strategic review, Tania considered restructuring the ownership to increase her SMSF’s stake in the property. Her goal was to align the investment more closely with the SMSF’s long-term objectives and to enhance the fund’s contribution to her retirement planning.


Upon consulting Investax, Tania encountered several regulatory hurdles:

  1. Related Party Transaction Regulations: The ATO’s guidelines prohibit SMSFs from acquiring assets from related parties, a measure designed to prevent conflicts of interest and ensure investments solely benefit the fund members.
  1. Limited Exemptions: Although there are some exceptions to this rule, such as for business real property or listed securities, residential properties do not qualify. The co-ownership arrangement between Tania and her SMSF does not circumvent these restrictions.

Solutions and Recommendations

After a detailed examination of the ATO’s rules and Tania’s investment scenario, the following strategies were advised:

  1. Preserving the Current Structure: Given the regulatory constraints, it was recommended that Tania maintain the existing ownership split to remain compliant with ATO directives.
  1. Option to Sell SMSF’s Share: Tania’s SMSF could consider selling its portion of the property back to her upon retirement, provided the sale reflects the property’s market value. This move would comply with ATO regulations and could offer Tania greater flexibility in her tax strategy.

Tania’s journey through the intricate landscape of SMSF regulations in Australia, particularly in the realm of property investments and dealings with related parties, serves as a crucial reminder. It underlines the importance for SMSF trustees to be well-versed in ATO guidelines to ensure compliance and safeguard members’ retirement assets. Given the dynamic nature of regulations and market conditions, it’s vital for trustees to regularly review and adapt their investment strategies.

If you find yourself navigating similar complexities or have questions about your SMSF, don’t hesitate to reach out to Investax. Our team is here to provide expert guidance and support for all your SMSF-related inquiries, ensuring you make informed decisions that align with current regulations and best practices. Contact Investax today to secure your fund’s future and optimise your investment approach.

Pro Tips

  1. Consider Ownership Structures Carefully: When investing in property through your SMSF, think through the ownership structure. Understand the implications of the fund’s share versus personal ownership, especially in relation to compliance and future flexibility.
  1. Related Party Transaction: our fund can only buy property from you if it’s classified as business real property. So, if you own a commercial property, your fund could potentially purchase it. However, this rule doesn’t apply to residential properties – those are off-limits for your fund to acquire directly from you.
  1. Seek Professional Advice: Navigating SMSF investments, particularly in real estate, can be complex. Consulting with SMSF Tax Specialists or financial advisors can provide clarity, ensure compliance, and optimise your investment strategy.