Buying Property with Superannuation in Western Australia

Buying property through your superannuation has become a well-known strategy for investors across Western Australia. Using a self-managed super fund (SMSF) to purchase residential or commercial property can provide long-term wealth benefits, but it requires careful planning and strict compliance with both tax and superannuation laws.

In 2025, there will be some updated rules and costs that SMSF buyers need to be aware of.

The Contract Name Must Be Right

When purchasing a property through your SMSF, the name listed on the contract of sale is critical. In WA, if your SMSF is not borrowing to complete the purchase, the contract should name the corporate trustee of the SMSF acting as trustee for the fund, ie:

SMSF Trustee Pty Ltd ACN XXX XXX XXX as trustee for [Name of Fund]

However, if your SMSF is using a limited recourse borrowing arrangement (LRBA), that is, borrowing money to buy the property, then the contract must name the holding trustee company as trustee for a bare trust, which holds the property on behalf of the SMSF, ie:

Holding Trustee Pty Ltd ACN XXX XXX XXX as trustee for the [Name of Holding Trust] for the SMSF Trustee Pty Ltd ACN XXX XXX XXX as trustee for [Name of Fund]

WA is one of a few states where the bare trust deed must be signed and dated before or on the same day as the contract. Failing to get this right can result in contract issues and possibly increased stamp duty costs, there are tax implications and you risk the loss of negotiating power with your property seller.

It’s also essential to ensure that the deposit is paid from the SMSF's bank account to demonstrate the fund’s beneficial ownership.

Property Development and Renovations Are Limited

Under current superannuation laws, an SMSF using borrowed funds must acquire what’s known as a “single acquirable asset.” This means your SMSF cannot use borrowings to purchase a vacant block and then build a house, nor can it use loans to develop or significantly renovate an existing property. Subdividing land or buying off-the-plan (where the SMSF only holds a contractual right) is also not allowed under a borrowing arrangement unless the fund acquires the completed asset directly.

There are advanced structures that can allow for property development through super, such as using a private unit trust where unrelated parties hold a majority interest. However, these arrangements are complex and carry strict rules around ownership and control. Residential property cannot be acquired from or leased to related parties, although commercial properties have more flexibility. These scenarios should only be explored with professional legal and financial advice.

Property Use Must Be Investment Only

You cannot use SMSF-purchased property for personal purposes. The property must be held solely as an investment and must be leased to an unrelated third party. This rule applies equally to residential and commercial properties, as well as to holiday homes. Letting a family member live in an SMSF-owned property, even under a lease agreement, breaches superannuation rules and can trigger serious penalties.

The same rules apply to overseas properties. While it is technically possible for an SMSF to purchase real estate in another country, the structure must comply with both Australian and foreign legal requirements. There must also be clear proof that the property is not being used personally by the SMSF members or their families. Managing an overseas property via super can be complex and is generally not recommended unless you have extensive experience.

Borrowing Through Your SMSF in 2025

While SMSFs are still permitted to borrow funds to purchase property, the lending landscape in 2025 remains limited. The major banks no longer offer SMSF loans. Instead, borrowers must rely on specialist lenders or second-tier providers, many of which impose stricter conditions and offer less competitive interest rates.

The typical loan-to-value ratio (LVR) is up to 80% for residential property and between 65% to 70% for commercial property, although postcode restrictions often apply. Rural or farming properties may be eligible for SMSF purchase, but borrowing limits are often lower, and additional conditions may apply based on land size and location.

If your SMSF is borrowing from a related party, such as one of the fund members, specific rules set by the ATO apply. From 1 July 2025, the ATO’s updated “safe harbour” interest rates are 8.95% for property loans and 10.95% for listed securities. These rates must be applied to ensure the loan remains compliant unless you are locked into a fixed term.

How Long It Takes and What It Costs

Setting up an SMSF and purchasing property can take six to ten weeks, depending on how prepared you are. Once your SMSF is established and registered with the ATO, you’ll need to roll over funds from an existing retail or industry super fund, which can take up to four weeks. After that, you can apply for finance and begin the purchasing process.

In 2025, setting up a new SMSF with a corporate trustee costs around $1,500, while establishing the bare trust and holding trustee company typically costs another $1,500. Legal fees for conveyancing may range from $1,000 to $2,000, and lenders may charge up to $2,500 in establishment and legal review costs.

Ongoing costs include accounting and audit fees every year; the SMSF must also pay the ATO supervisory levy and ASIC’s annual review fees for each company involved. Prepaying ASIC fees for 10 years is an option for those wanting to simplify future administration.

Should You Buy Property with Super?

While owning property through your SMSF may help you build long-term wealth, it’s not suitable for everyone. A super fund and property purchase should not be seen as a way to sidestep lending restrictions or escape personal borrowing limits. Rather, it must form part of a clear investment strategy that aligns with your long-term retirement goals.

In many cases, the opportunity to buy property through super encourages people to take greater control over their retirement savings, particularly those who may not have engaged with their super in the past. That’s a positive step, but the decision must still be approached with care, especially given the high costs, complexity and strict regulatory requirements involved.

Final Thoughts

Buying property with super in WA can be a powerful strategy, but it’s a transaction that must be done properly from the outset. From contract wording to trust deed timing, every step matters. The rules around borrowing, related-party involvement, and property use are detailed and enforceable.

If you’re considering this strategy, speak with a qualified financial adviser, solicitor, and tax professional who understands SMSFs and property investment in Western Australia. It’s also wise to engage an experienced settlement agent like Adaptive Settlements to help you navigate the legal and administrative side of settlement. Contact us today if you're considering buying property with your self-managed superannuation fund.

Disclaimer: This blog post is for general information only and is not intended as legal, financial, or accounting advice. You should seek independent professional advice based on your specific circumstances before making any financial decisions or entering into any contracts. Superannuation and tax rules are complex and subject to change. Always check with a licensed adviser or your accountant before proceeding.