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Angie T.
Angie T.
Gladesville, NSW

Looking to buy a block of land in Nelson Bay and build in 5 years for our retirement. Price $450,000. Can we use SMSF to buy and how much could we borrow? We do want to live in the property when we retire in 10 years?

9 months ago


Hi Angie

Short answer is no. SMSF rules are very specific. You are not allowed to live in a property that you purchased via SMSF. Further to this; you are not permitted to purchase vacant land with super either. Basically the property that you purchase via SMSF MUST generate an income.

South West Lending Solutions


Hi guys. A SMSF is allowed to invest in anything, including vacant land. It (the investment) has to conform to the investment strategy of the fund and satisfy the Sole Purpose test (to be for the provision of benefits in your retirement). But the fact that the land might be vacant now is not of itself a reason that the SMSF cannot purchase it. Future capital growth CAN be a valid reason for the SMSF to invest in vacant land. I have seen plenty of funds with exactly this strategy.
It WOULD have an impact on the potential for borrowing in super to acquire the property, but that is a different thing entirely.

Hi Angie,
Sam is absolutely correct. Do you have another way of freeing up equity outside Super to purchase it? Could you transfer an existing investment property into your Super freeing up your borrowing capacity outside Super?
These are just random suggestions of course. I would highly recommend you speak to a financial planner and set a course for your retirement and then see an experienced broker (not from the planners office) to go through how you might finance those aspirations.
It will be well worth paying a couple of grand to make sure you act within the rules, tax effectively and for your long term benefit.
Best of luck with it

Hi Angie,

We need to talk this through to work it in with your retirement plans.

Can you buy land in your SMSF? Yes
Can you buy it with borrowed money? Probably not, the bank won’t lend
Can you build a property in your SMSF? Yes. Provided there are no borrowings involved.

I have clients who have purchased their retirement homes in their SMSF now. As Scott & Sam have mentioned you can’t live in the property whilst it’s owned by the SMSF - you need to move it out.

It’s all very complicated but possible. You need to sit down with an adviser who can help you step you through it all. You should expect to pay fees for this advice.



A further comment to James' comments about owning the property in the SMSF......you absolutely CANNOT borrow to build on the land after the fund has purchased the land. the legislation requires a "single identifiable asset" when borrowing, and so borrowing to develop property clearly breaches this rule.
And yes, you need to talk to an expert in this area. There are huge potential benefits with purchasing property in a SMSF, but also massive risks if you breach the rules!!!

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