A guide to selling SMSF property
Changes to SMSF borrowing rules Effective 10 Aug 2026
From 10 August 2026, a new legislative change means an SMSF can no longer take out a new loan to buy a residential property. If your SMSF already holds a loan on residential property, this doesn’t affect you. The change doesn’t apply to commercial property purchases or lending through an SMSF.
In addition to that, the change doesn’t force the sale of residential property already held through an existing Limited Recourse Borrowing Arrangement (LRBA) or prevent an SMSF from buying residential property outright without borrowing.
If you’re planning on selling your SMSF property, as opposed to renting it out, but aren’t sure how to go about it, here are a few things you need to know:
Process of selling an SMSF-owned property
First, you need to understand the sale process from beginning to end. The good news is that selling a property bought through an SMSF isn’t that different compared to a standard property sale. The difference lies in where the profit from the sale goes and how that affects your super fund. Here’s a quick overview of the process:
- Put your SMSF property on the market. Look at similar homes sold in your area to figure out a fair market price. Getting the price right is essential. Price it too low, and you risk leaving money on the table; price it too high, and you could alienate buyers. A real estate agent could help you ensure your property is priced fairly.
- Make quick repairs and improvements. Doing so can increase the value of your property. Although this isn’t a requirement, making simple repairs and upgrades could make your property more attractive to buyers.
- Have the contract of sale drawn up. A real estate agent, solicitor, or conveyancer will prepare the contract of sale. Since selling a property owned by an SMSF is a bit different from a standard home sale, having a property lawyer oversee the contract may be a good idea.
- Negotiate with the buyers. Talk to buyers about the final price and terms. Your real estate agent can deal with the back-and-forth discussion about price, stipulations, and initial payments.
- Contact the lender to discharge the SMSF mortgage. Get in touch with your lender immediately. Before finalising the settlement, talk to your lender about discharging the mortgage on your SMSF property. This could be a lengthy process, so it’s best to prioritise this step.
- Finalise the settlement. During the settlement, all the paperwork and documents are signed. The property is exchanged from the seller to the buyer. Whoever manages the SMSF property will hand over the title. The proceeds from the sale will go to any fees incurred during the sale and the rest to the super fund.
Even though selling an SMSF-owned property follows a similar process to a standard property sale, hiring experts is still a good idea. Real estate professionals can guide you through the SMSF property sale, so you can avoid common pitfalls.
Rules when selling an SMSF-owned Property
There are a lot of strict guidelines that must be followed when selling a property owned by an SMSF. Before putting the SMSF property up for sale, you need to make sure your super fund’s trust deed allows it. Selling assets should be part of your SMSF’s investment strategies.
When setting the sale price on the SMSF property, it must be at the true market value and generally should have an independent market valuation. Selling an SMSF commercial property to fund members or related parties is possible, but the deal must be made in an arm’s length transaction.
Costs and taxes involved when selling an SMSF-owned property
When selling a property owned by an SMSF, you may incur legal fees and disbursements related to the conveyancing process. Legal fees vary depending on the solicitor and transaction, but typically cost between $500 and $1,500. Meanwhile, disbursement costs could cost anywhere from $200 to $500. This includes title searches, transfer fees, lender fees, and the like.
Income or investment returns of an SMSF are taxed at a 15% concessional rate during the accumulation phase. The profit from your SMSF property sale or capital gains is considered regular income. You must include capital gains and capital losses on the SMSF annual return to the ATO (Australian Tax Office).
Your SMSF property could be eligible for a tax discount if it’s been held for over 12 months before it was sold. In some circumstances, capital gains may be exempt from tax where the asset supports retirement-phase pension liabilities, subject to applicable superannuation and tax rules. However, you need to ensure that the SMSF property meets the requirements. Get an SMSF accountant to help you manage your super fund and ensure you’re on the right path.
Can I sell my SMSF-owned commercial property to myself?
If it meets specific conditions, you could sell an SMSF commercial property to yourself. However, there are strict guidelines you need to meet for the sale to be possible.
When selling an SMSF-owned property to yourself, you need to make sure the transaction is at arm’s length. The transaction must be conducted on arm's length terms, meaning it reflects normal commercial arrangements and market value, and, an independent valuation must be conducted on the property. It would be best to consult with a professional before taking any further action.
Can I sell my investment property to my SMSF?
Unless an exception applies under the Superannuation Industry (Supervision) Act 1993 (SIS Act), an SMSF is prohibited from buying the property from members or related parties. This includes certain individuals and entities connected to the members and trustees of the SMSF, as defined by the SIS Act.
In specific cases, it is possible to sell your investment property to your SMSF, if it is a commercial property. Essentially, you can only sell your investment property to your SMSF if it’s considered a business real property. This refers to property used wholly and exclusively in one or more businesses. Think commercial properties, office buildings, or factories.
Business real property does not include residential investment properties. You can’t simply rent out your investment property and call it a business to qualify. For your investment property to be considered business real property, it must meet certain qualifications.
Before selling your investment property to your SMSF, weigh the pros and cons carefully. If done incorrectly, you could face serious consequences. The wisest thing to do is ask for advice from a professional so they can guide you through the process.
Find competitive rate SMSF loans at loans.com.au
If you’re interested in buying a property using your SMSF, loans.com.au offers a range of SMSF residential and SMSF commercial loans. Get in touch with us today to learn more about your finance options. Call 1300 561 041 today to speak with our friendly lending specialists!
Disclaimer: The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek independent professional advice tailored to your personal circumstances before making any financial decisions.
Find out in under 2 minutes if you qualify for one of our home loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
