SMSFs can invest in both residential property and commercial property (also referred to as business real property).
However, the SMSF cannot purchase a residential property from a related party. You cannot have any dealings with a related party when investing in residential property, so you or related party cannot live in the property.
Important Information
When acquiring property using a Loan, the property must be purchased in the name of the Bare Trust (also referred to as a Property Custodian Trust) Trustee Company. All Directors of the Bare Trust Trustee Company must sign the Purchase Contract. Please note that the Purchase Contract can be signed with a "subject to finance" clause. You must not put the name of your SMSF on the Purchase Contract if you are borrowing to purchase the Property.
Example:If the Bare Trust Trustee Company Name is Smith Pty Ltd then the purchaser on your Purchase Contract will be: Smith Pty Ltd. Neither the Trustees of your SMSF or the SMSF itself should be named on the Purchase Contract when borrowing to purchase Property in your SMSF.
When acquiring Property with no borrowing, the Property must be purchased in the name of your SMSF. The following is noted:
The Property must be purchased in the name of the Trustees as Trustee for the SMSF. All Directors of the Trustee Company or Individual Trustees must sign the Purchase Contract.
Example 1:If your SMSF has Individual Trustees (eg John Smith and Emma Smith) and the SMSF Name is Smith Superannuation Fund then the purchaser on the Purchase Contract will be: John Smith and Emma Smith as trustee of the Smith Superannuation Fund. All Trustees of the SMSF must sign the Purchase Contract.
Example 2:If your SMSF has a Company Trustee (eg Smith Pty Ltd) and the SMSF Name is Smith Superannuation Fund then the purchaser on the Purchase Contract will be: Smith Pty Ltd as trustee for the Smith Superannuation Fund. All Directors of the Company Trustee must sign the Purchase Contract.