For many higher-income professionals, superannuation is no longer viewed solely as a retirement savings vehicle, but as a strategic tool for building long-term wealth.
Using super to invest in property can be complex, heavily regulated and unsuitable for some investors. But for the right individual, structured correctly and with the right advice, it can be an effective way to gain exposure to residential or commercial property while benefiting from the concessional tax environment of superannuation.
Please note that this article is general information only. Get advice from a licensed financial adviser or qualified tax professional before acting.
Why property remains attractive for long-term investors
Property has long played a central role in wealth creation. According to the most recent data from the Australian Bureau of Statistics, Melbourne’s median house price rose 159% in the 20 years to September 2025 (see graph below), and is forecast to keep rising in 2026. While past performance does not guarantee future outcomes, this long-term growth helps explain why many investors continue to see property as a cornerstone asset.
Within superannuation, property can provide a combination of capital growth and rental income, while diversification away from traditional shares and managed funds may help manage overall portfolio risk.
Using an SMSF
Superannuation funds cannot invest directly in residential or commercial property, unless it’s done through the structure of a self-managed superannuation fund (SMSF). An SMSF gives members control over investment decisions, but also places responsibility for compliance squarely on the trustees.
SMSFs have grown steadily in popularity. At the end of June 2025, there were 647,096 SMSFs, representing a 14% increase over five years (see graph below), according to the Australian Taxation Office. Collectively, these SMSFs held $1.03 trillion in assets, of which 17% was invested in property.
This data highlights how property has become a mainstream asset class within the SMSF sector – but also underscores the importance of getting the structure right.
How property can be purchased through superannuation
Disclaimer: This is general information only. Get advice from a licensed financial adviser or qualified tax professional before acting.
An SMSF can purchase property using either cash or borrowed funds. Where borrowing is involved, this must be done through a limited-recourse borrowing arrangement (LRBA).
Under an LRBA:
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The loan is secured against the property only
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If the SMSF defaults, the lender’s recourse is limited to that asset – protecting other assets
LVRs are typically more conservative than with standard home loans, and interest rates are often higher due to the additional complexity and risk.
Residential property via superannuation
Residential property can be purchased through an SMSF, but strict rules apply. Considerations include:
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The property must meet the sole purpose test, meaning it is held solely to provide retirement benefits
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Members or related parties cannot live in or rent the property, even temporarily
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The property cannot be purchased from a related party
For high-income professionals, residential SMSF property may suit those with long investment horizons, strong cash flow outside super and a clear understanding of liquidity risks.
However, residential property inside super can be less flexible. Rental yields may be modest, and selling the asset to fund pension payments later in life can be challenging if market conditions are unfavourable.
Commercial property via superannuation
Commercial property is often where SMSF property strategies become more compelling.
Unlike residential property, an SMSF can lease commercial property to a related business, provided the lease is:
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On arm’s-length terms
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At market rent
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Properly documented
This makes commercial SMSF property particularly attractive for business owners who want to buy their office or factory or purchase their warehouse.
Advantages may include:
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Greater flexibility
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Potentially higher yields
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Rent paid by the business going back into the SMSF
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Stability of tenure for the operating business
From a lending perspective, commercial SMSF loans often differ significantly from residential SMSF loans, with a stronger focus on tenant quality, lease terms and property fundamentals.
Tax considerations and benefits
One of the principal attractions of using super to invest in property is the tax environment. Within an SMSF:
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Rental income is generally taxed at 15% in accumulation phase
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Capital gains on assets held longer than 12 months may be effectively taxed at 10%
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In pension phase, rental income and capital gains may be tax-free, subject to balance caps
These settings can be particularly appealing for high-income earners who would otherwise face the top 45% marginal tax rate outside super.
That said, contributions caps, transfer balance caps and ongoing compliance obligations must be carefully managed.
Risks and limitations to consider
Using super to invest in property is not without risk. Key concerns include:
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Concentration risk – a single property may dominate the SMSF portfolio
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Liquidity constraints – property is not easily sold to meet expenses or pensions
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Cash flow pressure – loan repayments, expenses and vacancies must be managed
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Regulatory complexity – compliance breaches can attract significant penalties
This strategy is rarely suitable for those early in their careers or with modest super balances.
Getting the structure right
For professionals and business owners earning high salaries, SMSF property strategies often sit at the intersection of:
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Superannuation advice
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Tax planning
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Lending structuring
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Long-term wealth strategy
A mortgage broker experienced in SMSF lending can work alongside your accountant and financial adviser to ensure your loan structure, lender selection and documentation align with both regulatory requirements and long-term goals.
Final thoughts
Using superannuation to invest in property can be a powerful strategy for the right investor – particularly those with strong incomes, established super balances and a long investment horizon. Whether residential or commercial, success depends less on the property itself and more on disciplined structure, compliance and patience.
As always, specialist advice is essential before proceeding, as SMSF property decisions are difficult – and costly – to unwind once made.
If you’re considering using your superannuation to invest in property, it’s important you consult an experienced SMSF broker, like AXTON Finance. We’ll help you understand your borrowing power, the loan structure and the steps involved so you can make an informed decision. Call 03 9939 7576, email getabetterrate@axtonfinance.com.au or get in touch today.