Updated: September 2026
Can an SMSF sell property to a member or related party?
Yes — an SMSF can generally sell property to a member or related party. However, the transaction needs to be carefully managed to ensure it is conducted at market value and on arm’s length terms.
This is an important distinction because the rules governing an SMSF acquiring property from a related party are different from those applying when the SMSF is selling property to a related party.
Buying from a related party versus selling to one
Section 66 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) generally prevents an SMSF from acquiring assets from a related party, subject to specific exceptions.
For example, an SMSF will generally be prohibited from acquiring residential property from a member or related party. However, qualifying business real property may be acquired from a related party provided the relevant requirements are satisfied, including acquisition at market value.
Section 66 is an acquisition restriction. It does not impose the same general prohibition on an SMSF disposing of an asset to a related party.
Accordingly, an SMSF may sell residential or commercial property that it already owns to a member, relative or other related party — but this does not mean the trustees are free to determine whatever sale price or terms they wish.
Market value is critical
Section 109 of the SIS Act requires SMSF investments and transactions to be conducted on an arm’s length basis, or on terms that are no more favourable to the other party than would be expected under an arm’s length arrangement.
This means that where an SMSF sells property to a related party, the transaction should reflect the same commercial terms that would apply if the property were being sold to an unrelated purchaser.
Most importantly, the sale price should reflect the property's true market value.
Selling an SMSF asset to a member or relative for less than market value can have significantly more serious consequences than simply failing the arm’s length test. The ATO's view is that selling an SMSF asset below market value to a member or relative constitutes the provision of financial assistance and can contravene section 65 of the SIS Act.
Conversely, selling an asset to a related party for more than market value can also create tax consequences, including potential non-arm’s length income (NALI) implications.
In other words, when dealing with a related party, more than market value is not necessarily better — market value is the objective.
Do you need an independent property valuation?
The legislation does not require every sale of real property to a related party to be supported by a valuation from a qualified independent valuer.
However, the ATO expects SMSF valuations to be based on objective and supportable evidence, and a related-party property transaction is an area where strong valuation evidence is particularly important.
For a material property transaction involving a member or related party, obtaining a current independent valuation from a suitably qualified property valuer is therefore prudent and provides considerably stronger evidence that the transaction occurred at market value.
The valuation should also be relevant to the date of the transaction.
Don't forget the tax implications
The disposal of property by an SMSF may give rise to a capital gain or capital loss.
Complying SMSFs may be entitled to the one-third CGT discount where the asset has been held for at least 12 months, while some or all of a capital gain may potentially qualify as exempt current pension income where the relevant requirements are satisfied.
Where parties are not dealing at arm's length and the consideration does not reflect market value, the CGT market value substitution rules may also apply.
For commercial property, trustees should also consider whether GST applies to the transaction and whether provisions such as the going-concern rules may be relevant.
Transfer duty — commonly referred to as stamp duty — should also be considered, as the rules and concessions differ between Australian states and territories.
Checklist before selling SMSF property to a related party
Before proceeding, trustees should consider the following:
- Check the SMSF trust deed and investment strategy.
- Confirm who the purchaser is and whether they are a related party of the fund.
- Obtain reliable and current evidence supporting the property's market value — preferably an independent valuation for a related-party property transaction.
- Ensure the contract price, deposit, settlement arrangements and other terms are commercially reasonable.
- Ensure the fund actually receives the sale proceeds in accordance with the contract.
- Consider the fund's CGT and, where relevant, GST consequences.
- Consider any applicable state or territory transfer duty.
- Properly document the trustee's decision and retain the supporting valuation and transaction documents for the SMSF audit.
The key point
An SMSF can generally sell property to a member or related party. The risk arises when the transaction is treated differently simply because the parties are related.
A related-party sale should be approached in much the same way as a sale to an unrelated purchaser: properly documented, commercially conducted and supported by evidence of market value.
Where there is uncertainty, trustees should obtain appropriate tax and SMSF advice before entering into the transaction.