Renovating Property Within Your Self Managed Super Fund (SMSF)

An exciting part of having your own SMSF is investing in property.

Sometimes that’s as simple as purchasing a property and renting it out. But more often than not, we want to take this a bit further.

Let’s discuss how you can start renovating property within your Self Managed Super Fund, stay on the right side of the ATO and not run out of cash!

Can you renovate an older property?

If you want to renovate an older property with borrowed funds, you have to be careful that you do not “improve” the property.

But let’s assume that you’re actively trying to add value to your property, so how do you do this? You’ll need to look at some other options.

You can go nuts with renovating and growing the value of your property if you can do so without using borrowed funds i.e. you fund the reno through surplus cash you have in your SMSF account. This can be a fantastic strategy to not only grow the capital value of your asset, but also allow you to charge a higher rent on the property, and therefore increase cash inflows to your fund.

Remember if you take this approach, and you’re going to have a period without tenants, don’t use all your cash on the renovations! Make sure you keep at least 10% of the fund in cash to keep the bank happy, and you’ve got enough on top of that to fund the mortgage payments whilst you’re not charging rental income.

What if I don’t have surplus cash to do renovations?

Knowing your cash position in the fund is absolutely key before purchasing any property. Having this available, or not, might dramatically affect the property you purchase in the first place.

If you don’t have the money right now, there might be some other works you can do to keep your property looking fresh (keep reading!), or as an alternative, you wait a few months to accumulate the resources you need to pay for the renovations (or make extra contributions to your super to top it up).

Why would I renovate if not to improve the value of the property?

It’s important to understand the distinction between three concepts of property alteration – maintaining, repairing and improving.


This is about preventing damage or deterioration of your property, so that it can continue to exist in its current state.

What could this look like?

  • Painting your house, or
  • replacing the guttering would be fine.



This is about making good any defects or damage to your property to reinstate it to its current state. It may be appropriate to consider borrowed funds for a significant repair, such as substantial structural or electrical issues, or damage from a natural disaster.

What could this look like?

  • Replacing sections of your flooring or roof due to weather events,
  • restoring part of a kitchen or bathroom affected by fire or flood, or
  • even rebuilding the entire house if affected by fire (provided you build a comparable house).



This is about making your property significantly better than it was before, this could be through:

  • adding additional features (a deck in the backyard),
  • improving the quality of existing features (renovating the bathroom), or
  • changing the rights to the property (adding a car space).

What could this look like?

  • Extending your kitchen or bathroom,
  • adding in tech systems such as home automation, AV systems or added security systems,
  • going above and beyond repair when making good damage.


If you’re unsure on your SMSF strategy, or want to chat more about how to make property within superannuation work harder for you, book in a free session for a SMSF Consultation today.


Disclaimer: all information contained within this article is of a general nature. It should not be relied upon when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.