Can You Buy Property With Your Super? SMSF Co-Living Explained

Answering: Can you buy property with your super through an SMSF, and where does co-living fit?

Estimated reading time: 8 min read

Yes, you can buy property with your super, but only through a self-managed super fund and only within strict rules set by the ATO. An SMSF can hold residential investment property, including purpose-built co-living, provided the investment is made solely to provide retirement benefits, the property is never used by you or a related party, and any borrowing is arranged as a limited recourse borrowing arrangement. It is genuinely different from buying in your own name, and it is not right for everyone. This is general information rather than personal advice, so the single most important step is to speak to a licensed SMSF specialist about your own fund before you do anything. The Harmony Group works alongside those advisers and provides information about the co-living side, not superannuation advice.

If you have looked at your super balance and wondered whether it could be doing more, that is a fair question to ask. Property inside super is one of the options people explore, and it is worth understanding properly rather than through a sales pitch.

The reality is that SMSF property comes with real obligations and real costs, and the rules are unforgiving of mistakes. Success depends on getting the structure right with proper advice, not on finding a shortcut. Regulators have also warned that high-pressure operators sometimes target super, which is another reason to move carefully.

This guide explains whether you can buy property through super, the rules that govern it, and where co-living can fit for a fund whose strategy suits it. Use it to prepare better questions for a licensed adviser.

Key Insights

• You can buy investment property through a self-managed super fund, but it must satisfy the sole purpose test: the fund exists only to provide retirement benefits, and neither you nor a related party may use the property.
• An SMSF cannot acquire residential property from a related party, and any borrowing must be a limited recourse borrowing arrangement, typically holding a single asset in a separate bare trust.
• Purpose-built co-living can suit an income-focused SMSF strategy, but suitability depends entirely on your fund. This is general information, not personal or superannuation advice.

Keep reading for the complete guide.

Table of Contents

• Can You Actually Buy Property Through Super?
• The Rules That Govern It
• Where Co-Living Fits in an SMSF

Can You Actually Buy Property Through Super?

So the short answer is yes, an SMSF can buy residential investment property. The longer answer is that the sole purpose test shapes everything that follows. Because the fund exists only for retirement benefits, the property cannot be used, even temporarily, for private or related-party benefit. A trustee cannot holiday in it, and a related party cannot live in it, even at market rent.

There are also acquisition rules. An SMSF generally cannot buy residential property from a related party, regardless of price, and every transaction must be conducted at arm’s length on genuine commercial terms, with rent at market rates. These are not fine-print technicalities. They are the conditions that keep the fund compliant, and getting them wrong can carry serious penalties.

This is exactly why licensed advice matters. Setting up and running an SMSF that holds property is a specialist exercise, and the right first step is a conversation with a licensed SMSF adviser about whether it suits your situation at all. Our companion guide on whether co-living is a good fit for an SMSF looks at this from the strategy angle.

The Rules That Govern It

If your fund borrows to buy property, it must do so through a limited recourse borrowing arrangement, or LRBA. Under an LRBA the property is held in a separate bare trust, and the lender’s recourse in the event of default is limited to that single asset rather than the fund’s other assets. An LRBA generally holds one asset, which shapes how a fund can use borrowing.

Borrowing inside super has also drawn closer scrutiny, with lenders applying more conservative terms to SMSF lending and regulators paying particular attention to private loans. Beyond borrowing, an SMSF carries ongoing costs and administration, and concentrating a fund in a single property raises diversification questions that a licensed adviser should help you weigh.

There is a consumer-protection dimension too. ASIC has cautioned that some operators promote property through SMSFs aggressively, sometimes without holding a licence to give the financial advice involved. That is a reason to check credentials carefully and to be wary of anyone urging you to set up a fund quickly. Our guide to choosing a co-living investment company sets out the questions worth asking.

• Confirm the sole purpose test is satisfied for any property your fund considers.
• Understand LRBA borrowing and its single-asset structure before relying on it.
• Check that anyone advising on the super side is appropriately licensed.

Where Co-Living Fits in an SMSF

For a fund whose strategy is income-focused, purpose-built co-living can be worth understanding, because it is designed to generate rental income rather than a yearly loss. That income orientation can align with a fund built around providing retirement benefits, which is the whole point of the sole purpose test. Whether it actually suits your fund, though, depends on your balance, your strategy, your diversification and your stage of life, and only a licensed adviser can make that call with you.

On the property side, purpose-built co-living is a new build, designed and certified to Class 1B for shared living, and professionally managed. Across The Harmony Group team’s delivered projects the historical average gross yield has been 10.8 per cent, with occupancy held above 98 per cent, though these are historical results and past performance is not a guide to future returns. The Harmony Group applies a 118-point analysis framework and declines roughly 85 per cent of the sites it assesses, and if co-living is not right for your circumstances, an honest assessment will tell you why.

What The Harmony Group does not do is give superannuation or financial advice. It provides general information about the co-living asset and works alongside your licensed SMSF adviser and accountant, who remain responsible for whether an SMSF and this kind of property are right for you. That division of roles is deliberate, and it is how the model should work.

• Start with a licensed SMSF adviser, not with a property.
• Match any asset to your fund’s strategy and diversification.
• Treat historical yield figures as historical and potential, never guaranteed.

You can buy property with your super through an SMSF, within rules that exist to keep the fund focused on retirement: the sole purpose test, no personal use, arm’s length dealing, and limited recourse borrowing. Purpose-built co-living can suit an income-focused fund, and with a 118-point assessment and a historical average yield of 10.8 per cent the team reports across more than 200 projects, it is designed to be checked rather than taken on trust. Because super is complex and personal, speak to a licensed adviser before you act.

For a deeper look, visit The Harmony Group to explore how we approach purpose-built co-living.

Frequently Asked Questions

Q: Can you buy property with your super in Australia?

A: Yes, but only through a self-managed super fund and within strict rules. The investment must satisfy the sole purpose test of providing retirement benefits, the property cannot be used by you or a related party, an SMSF generally cannot buy residential property from a related party, and any borrowing must be a limited recourse borrowing arrangement. This is general information, so speak to a licensed SMSF adviser about your own fund.

Q: Can I live in a property my SMSF owns?

A: No. Residential property held by an SMSF cannot be lived in or used by you or a related party, even temporarily and even if market rent is paid. Doing so breaches the sole purpose test and can lead to significant penalties.

Q: Is co-living allowed as an SMSF investment?

A: Purpose-built co-living can be held by an SMSF as a residential investment, provided the fund meets all the usual rules and the investment fits the fund’s strategy. Whether it suits your particular fund is a question for a licensed SMSF adviser, not a property company.

Q: What is a sensible first step?

A: Speak to a licensed SMSF specialist about whether an SMSF suits you at all. If you then want to understand the co-living asset, book a free, no-obligation strategy session for general information, and if co-living is not suitable, you will be told why.

Want to Learn More?

The Harmony Group’s team brings 15 years of specialist experience and a track record across more than 200 delivered co-living projects. The approach is educators-first: clear general information about the co-living asset, working alongside your licensed advisers rather than replacing them.

Citations

• “Rental properties in SMSFs: key rules for trustees, Smith Thornton”: Sets out the ATO rules for SMSF residential property, including the sole purpose test, the prohibition on any private or related-party use even at market rent, arm’s length dealing, and limited recourse borrowing through a bare trust. smiththornton.com.au
• “SMSFs and property, ASIC MoneySmart”: The Australian Government’s MoneySmart service explains buying property through an SMSF, the risks and costs involved, borrowing through an LRBA, and warns about promoters pushing property through super. moneysmart.gov.au/property-investment/smsfs-and-property

Related Reading

• Is co-living a good fit for an SMSF in 2026?
• What the 2027 negative gearing changes mean for investors
• Class 1B certification: an investor’s risk guide
• How to build a positive-cashflow property portfolio
• What is positive geared property, and how does it work?

General information only. The Harmony Group provides general information about property and co-living investment, not personal financial, tax, superannuation or legal advice, and does not hold an Australian Financial Services Licence (AFSL). It does not account for your objectives, financial situation or needs, so consider its appropriateness and seek advice from a licensed financial adviser, SMSF specialist, accountant or the ATO before acting. Past performance is not a guide to future results and historical figures may not be repeated.