SMSFs and Property: The Myths, the Risks, and the Red Flags

We’ve seen it far too often: Australians are approached with a “hot tip” – set up a Self-Managed Super Fund (SMSF) and buy property. On the surface, it sounds like a clever way to take control of your future. But look closer, and it’s often just a sales pitch dressed up as retirement planning, with massive hidden risks.

If you’ve got less than $500,000 in super and you’re being encouraged to go down the SMSF property path, especially by someone selling the dream, you need to stop and ask the right questions.

Case Study Example: A $220,000 Close Call

Here’s the kind of situation we’ve seen:

• An investor with $220,000 in super was encouraged to set up an SMSF to buy a new townhouse.
• The promoter wasn’t licensed under an Australian Financial Services Licence (AFSL).
• They were set to pocket a $50,000 “marketing fee” if the deal went ahead.
• Similar townhouses were already reselling for $80,000 less than the original price.
• Other buyers reported vacant properties, poor construction, and long delays.

The common theme? The promoter wasn’t interested in the investor’s retirement outcome; they were simply trying to sell property.

Two Common SMSF Property Traps.

1. The “Buy This Property Through Your SMSF” Trap:

• Almost all of your retirement savings tied up in a single property.
• Strict SMSF rules mean you can’t live in it, and your family can’t use it.
• Often requires a Limited Recourse Borrowing Arrangement (LRBA), which is costly and hard to refinance.
• You’re responsible for property management, admin, and audits.
• No rental income? The SMSF has no cash flow and no fallback.

2. The “Invest in This Property Fund Through Your SMSF” Trap:

• Unlisted, illiquid funds promoted as “exclusive opportunities.”
• Poor transparency – you often don’t know where the money really goes.
• Withdrawals can be frozen if the fund runs into trouble.
• Sometimes promoted by unlicensed salespeople earning big upfront commissions.

Regulators Are Warning Too.

This isn’t a theoretical risk, it’s happening right now.

• ASIC has charged individuals for promoting SMSF property schemes without a licence.
• The ATO has issued warnings about schemes that misuse super or encourage inappropriate SMSF set-ups.

(See ASIC’s media release here and the ATO’s SMSF scam alert here)

What Clear Sky Does Differently:

At Clear Sky, we don’t sell property. We don’t take kickbacks. We don’t push one-size-fits-all products.

Our role is simple:

• We help you plan for retirement with licensed advice that considers your full situation.
• We show you the actual numbers behind your options, not sales hype.
• We protect your future by focusing on what’s in your best interests.

Yes, SMSFs can be suitable in some circumstances. But deciding to set one up should never begin with someone selling you a property or an “exclusive” fund.

Don’t Gamble with Your Retirement:

Your super is likely one of the biggest financial assets you’ll ever have. One bad decision could cost you decades of savings. If you’re being pitched a property deal through super, pause – and get advice from someone whose role is to help you plan for retirement, not to sell you real estate.

At Clear Sky Financial, our focus is on helping Australians build smarter retirement strategies – backed by licensed, professional advice. Because your future deserves more than a sales pitch.

Need a second opinion on your retirement plan?

Please reach out to us; we’re here to help you retire smarter, not poorer.

Important Information:

The information provided is factual and general in nature. It does not take into account any person’s objectives, financial situation, or needs. You should consider the appropriateness of the information, having regard to your objectives, financial situation, and needs, and seek personal financial advice before making any decisions.