Should I buy a property in my super fund? Readers Question

Should I buy a property in my super fund was the crux of the question I recently received from a reader.

Here’s the question and my reply.

We have been approached to purchase a property in SMSF by withdrawing all of our funds from our super.  We have around $150,000 combined super and our marginal tax rate is 32.5 per cent. Is this a good idea? Gillian, NSW.



I don’t know your personal situation, so I can’t give you advice. In fact it would be wrong to do so in this forum, but please let me make some general observations;

Currently ASIC are concerned that property promoters are encouraging investors to buy properties in the Self Managed Super Funds. While it may not be the wrong thing to do, their concern is the vested interests of the promoters may not be in the best interest of the investor and that one needs appropriate licensing to advise on investments in an SMSF.

I’m not licensed to give this type of advice either but I recently read an article suggesting that financial planners often recommend that, based on current average annual returns, a couple would need close to $1,000,000 in superannuation when they retire to live modestly.

In my opinion that would only give them a very modest lifestyle since they would in general live off the $40,000 or so interest they receive on this, or on dividends from the shares in the super fund.

Apparently a single person would need about $800,000, once again to live modestly.

By the way…

I think you will need much, much more than this to fund a comfortable retirement.[sam id=37 codes=’true’]

Either way this means millions of Australians will struggle in retirement, because only 10% of Australians have more than $100,000 in their super accounts.

So I understand why currently more and more investors are looking to take control of their financial future and are setting up a Self Managed Super Funds in the hope of getting better returns. And many are looking to invest in property in their SMSF.

For many this is a good idea. I know I’ve run my own SMSF for over 25 years and it’s been beneficial to me.

But…be careful with people giving you financial advice

Are they true consultants who you pay or are they sales people selling a product – in this case real estate?

Of course before you go down the route of setting up your own SMSF, it is critical to seek independent advice from a properly qualified financial planner to ensure that it is appropriate for your circumstances and that you set up things correctly and don’t fall foul of the tax man.

For example it would seem prudent not to invest “all” of your super in one investment – there’s something to be said for diversification.

We’ve previously discussed buying property in your SMSF in much more detail in the following blogs:

Will Super see you through retirement?

Is there a conspiracy against SMSF’s

6 common mistakes made when buying an investment property in an SMSF

Investing in property – a super idea



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit

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