More Australians are exploring ways to make their superannuation work harder for them. One option that has gained popularity is using a self managed super fund, or SMSF, to invest in property. This includes buying an apartment as part of a retirement strategy.

An SMSF gives you greater control over how your retirement savings are invested. While many people choose shares or managed funds, property offers a tangible asset that can diversify your portfolio.

How the Process Works

When an SMSF buys an apartment, the fund itself becomes the legal owner. This property must be held purely for investment purposes. It cannot be lived in by you or your relatives, and it must comply with the sole purpose test set out by the Australian Taxation Office.

Purchases can be made using the existing funds within the SMSF or through a limited recourse borrowing arrangement. This type of loan protects the other assets in your fund in case the property investment underperforms.

For a detailed step by step guide on buying property with an SMSF, you can view it here for more information on how to buying using your SMSF.

Choosing the Right Apartment

The type of apartment you buy should align with your long term investment goals. Factors to consider include location, rental demand, strata fees and the potential for capital growth.

Newer developments may offer modern features and lower maintenance costs, while established apartments might provide better value and proven rental returns. Whichever you choose, it must always be an arm’s length transaction, meaning it is bought and rented out on commercial terms.

Costs and Compliance

Investing through an SMSF comes with strict compliance requirements. You will need annual audits, detailed record keeping and professional advice to ensure all rules are followed.

Buying property through an SMSF can also involve higher upfront costs, such as legal fees, financial advice, and potentially larger deposits if you are borrowing. These factors should be carefully weighed against the potential income and growth the apartment might deliver.