self-managed super funds now allowed to renovate investment properties


Prop­erty investors are now allowed to ren­ov­ate there prop­er­ties in their self-managed super­an­nu­ation funds.

Superannuation tax rule eased to allow upgrades to propertyThe ATO (Aus­tralian Tax Office) has scraped the rul­ing that pre­ven­ted the usage of money had been loaned to buy an invest­ment property.


Self-managed super­an­nu­ation own­ers have always been per­mit­ted to main­tain their invest­ment prop­er­ties, but they were for­bid­den from changing/renovating them because it would can­cel out the idea of the “single acquir­able asset” of the term the A.T.O. had come up with, to clas­sify SMSF assets more distinctly.


This can turn around situ­ations where prop­erty investors had lost there appet­ite to use their SMSF and use mort­gages to acquire real estate.


The past rules meant, for example, that “if a SMSF had used a mort­gage to acquire real estate in QLD that was anni­hil­ated in the past floods, the insur­ance money owed could only be used to pay off  debt rather than repair and rebuild.


In that illus­tra­tion, the prop­erty investor would be left behind with just a block of land that they would be forced to sell, because any rebuild­ing or renov­at­ing, even if it was the same one, would be clas­si­fied as a new asset.


The new decision still requests that the renov­a­tion is paid for by cash already inside the SMSF apposed to borrowing.


The new rul­ing will not, non­ethe­less, allow SMSF prop­erty investors to pur­chase and demol­ish build­ings and develop units using fin­an­cing, for example.


Allow­able alter­a­tions include pools, exten­sions (an extra room) and lar­ger kit­chens, but they must not “rad­ic­ally change” the property.


It also gives self-managed super­an­nu­ation own­ers more space to move when acquir­ing a renov­a­tion type prop­erty that needs more than just main­ten­ance, even though, again, the new work can­not be fin­anced by a mortgage.


The rul­ing caps a suc­ces­sion of policies and pro­ced­ures that used to per­mit bor­row­ing to buy invest­ment prop­erty in SMSF funds until June 1999, which was then  for­bid­den to except for exist­ing set ups until Septem­ber 2007. The ATO brought in the no-improvements/renovations rule in 2010.



Jhai is an award win­ning Inter­net Mar­ket­ing Real Estate Agent for Eld­ers Toongab­bie and Kings Langley. After run­ning his own inter­net mar­ket­ing busi­ness he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to mar­ket them­selves online. Jhai is now fixed on one goal. To teach real estate agents that they can mar­ket online so much bet­ter than they cur­rently are.

Since then he has been con­sist­ently quoted in the Sydney Morn­ing Her­ald and Real Estate Busi­ness online. He is a reg­u­lar guest blog­ger on, shar­ing his expert­ise of mar­ket­ing aspects for the Real Estate Industry. His biggest pas­sions are his wife, mar­tial arts, dogs and most of all property.

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Cnr Federal Road Prospect Highway Seven Hills NSW 2147 Australia