Unfortunately, while you and your fellow trustees have some control over your fund, it doesn’t mean you can spend your money however you like.

The ability to renovate a residential property that you own through an SMSF comes down to how you purchased it. Those who borrowed through their fund to buy the property are restricted in what they can do. Slight improvements and repairs can be made, but a full-blown renovation is saved for those who used the cash in their fund to buy the property.

If you used the cash in your fund to buy a property outright, then you can absolutely do whatever you want, provided your SMSF deed allows you to do so. You can sub-divide, you can develop, you can pretty much do anything.

Those who borrowed through their fund aren’t entirely prohibited on making improvements on their property. Repairs are allowed, but they can’t be vast alterations that change the inherent character of the property.

Choosing to renovate your property ultimately comes down to increasing its value, but in order to do so, you have to be mindful how you go about it.

Whether you’re renovating to repair with borrowed funds or doing a complete makeover with accessible cash, renovating through an SMSF is only worthwhile if it improves the return on your property exponentially. Not playing by the rules or accessing your SMSF prior to retirement for personal gain can result in hefty penalties with fines up to 40 percent of the fund value.

For further information contact me on 0402 203 303 or email me at rob@rwfs.com.au.