The short answer to whether you can fix up your SMSF investment property is “maybe.” The long answer depends on a few things, like what kind of renovations you want to do and where your money is coming from. Choose from the options below to learn more about how to fix up your home.

Your self-managed super fund bought the house without taking out a loan

If you bought your SMSF property without a mortgage, you can make any changes you want. This, of course, depends on what your SMSF deed says. If the deed lets you do it and you have the money, you can bulldoze, renovate, develop, or divide the property as much as you want without breaking any SMSF property rules.

You used an SMSF loan to buy the property, and now you want to make changes

Due to the rules about limited recourse borrowing arrangements (LRBA), an SMSF that bought a property with an SMSF loan (an LRBA) cannot borrow money to make improvements to the asset. Even though the SMSF can’t borrow money to make improvements, it can use other funds, like the cash reserve or money from the SMSF’s members. If the SMSF members are paying for a change, it’s important to remember that the value of the change counts towards the contributions cap.

You can make improvements to an asset bought with a limited recourse borrowing arrangement if your fund has enough money to pay for them. However, you can only make so many changes to the asset. An LRBA can be used to buy a single asset, which can then be improved as long as the costs are not paid for by borrowing. And any changes made to the asset that can be bought must not change it into a different asset.

You used an SMSF property loan to buy the investment, and now you need to fix it up

Repairing SMSF investment properties is treated very differently from making enhancements or renovations because it is expected that a property will require maintenance due to normal wear and tear. Borrowing money to pay for necessary repairs that don’t alter the property’s essential nature is legal and not in violation of any agreement or law.

Before you start fixing up ore remodeling your SMSF investment property, check the definitions

Self-managed super funds have a lot of complicated rules and regulations. If you want to fix up or fix up your SMSF property, we’d love to talk with you to make sure you don’t break any rules. Use our free SMSF finance session to your advantage.