Hi, I am aware that I cannot transfer my residential investment property into SMSF. However, if that residential investment property is sold at an auction, can my SMSF become a legitimate bidder at that auction to purchase property in an open market condition?
No - SMSF would still acquiring residential property from an associate, whatever the method of the sale.
Hi @Gayantha,
No, the superannuation law prohibits an SMSF from acquiring assets from a related party, and you (as a member) are a related party to your SMSF. This prohibition applies regardless of the sale mechanism (including auction).
The acquisition rules are designed to prevent present‑day benefits to members or related parties. While there are limited exceptions, standard residential property is not an exception.
An SMSF can acquire residential property, but only from an unrelated party on arm’s‑length terms. The fact that a sale occurs via a public auction doesn’t change your related‑party status.
Thank you @Bruce4Tax and @NikkiATO,
Can I extend this question a bit.
Can a SMSF purchase a property the trustee's previously owned, but since have exchanged to an independent unrelated party. (I.e. for all purposes the property is no longer held by the trustees in their individual capacity or have control over via any entity). Is there a cooling off period that this type of a repurchase into smsf?
Is there a cooling off period that this type of a repurchase into smsf?
Not sure what you mean by that.
If this amounted to a "scheme" then there would be a breach.
Best to ask your SMSF auditor first.
Thanks @Bruce4Tax. The context is, if a property that a trustee once owned, and since then was sold, and then if the property has gone through a renovation and back in market, can that property be purchased by an SMSF which has the first owner as a trustee.
Hi @Gayantha,
Your SMSF can’t buy residential property from a related party. The main exceptions (such as business real property) don’t usually apply to standard residential property.
An SMSF can buy residential property from an unrelated party if the purchase is on arm’s‑length terms at the time of acquisition. What matters is who the seller is and the terms of the deal then, not how long ago a member last owned the property.
If the seller is genuinely unrelated (with no member or trustee control or influence) and the price and terms reflect market value, the law doesn’t prohibit the purchase just because a trustee previously owned the property. There’s no set ‘waiting period’.
However, arrangements that are pre‑planned or linked (for example, selling with an understanding the SMSF will later buy the property) can raise issues under the related‑party, arm’s‑length and sole‑purpose rules. We look at substance, not just form.
If you want certainty for your exact facts, you can apply for a private ruling so we can confirm whether the SMSF can acquire the property from that seller on those terms.
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