Is buying property in an SMSF worth it?

SMSF direct property has strong long-run economics for the right setup. Earnings inside super are taxed at 15% (vs 30-47% personal marginal rate), CGT after 12 months is 10% (vs 23.5% post-discount personal). Compounded over 10-20 years through accumulation phase + tax-free pension phase, the structure is materially favourable.

But the structure is rigid. Sole-purpose test (s62 SIS Act 1993) means the property can only exist to provide retirement benefits. Member can't live in it, rent to family, use it personally - ever. LRBA structure adds setup cost ($5-15K) + ongoing audit + actuarial certificate ($2-5K/year).

Practical thresholds: minimum balance $200K to absorb compliance overhead without eating returns. Better at $500K+. Conservative LVR (60-70% - the LRBA cap is typically 70%) keeps the leverage manageable. Property yields 5%+ gross to ensure the loan services without personal contributions topping up.

When NOT to do it: balance < $200K, near retirement (preservation rules block early access), aspiring to ever live in the property, comfortable with 30+ years of investing without the structure complexity. For most retail investors, personal-name + tax-effective structuring is simpler and similar economics.