Renovating With SMSF: Understanding Your Ownership Restrictions

After taking out an SMSF loan and moving into the property market, you might find yourself wanting to undergo renovations to help increase the value of the home. However, because you purchased the real estate with an SMSF loan, there are a number of restrictions and rules that you need to be aware of – otherwise you may unintentionally break the law and be liable for punishment. 

What are some of the restrictions for SMSF renovations?

One thing to keep in mind is that all the materials being purchased for the renovations must be under the name of the SMSF, not you personally. While some people may be tempted to consider doing this in order to secure personal discounts, it’s important to be upfront about this and secure materials through the right – and legal – channels.

Furthermore, there are no go-to rules for adding rooms to an SMSF purchased home. Therefore, if you’re looking into building a new bedroom or bathroom for the property, the best idea is to go and see the Australian Taxation Office in person to get a personalised, private ruling before proceeding.

And just like prior to renovation, you must not occupy the property at any time during construction or building. This is one of the main rules when it comes to purchasing SMSF property and it’s wise to observe this with extra caution during the renovation period – especially if you’re undertaking the jobs yourself.

These are just some of the things to keep in mind when considering renovations of an SMSF property. Naturally, it’s a good idea to get in touch with an expert to discuss the specifics of your goals in order to ensure you aren’t accidentally breaching any of the restrictions that come with being an SMSF property owner.