How to renovate property in DIY super funds

How to renovate property within your self managed super fund.

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An exciting part of owning property is being able to renovate it, but doing so becomes a lot more complicated in DIY super funds.

Super rules state that if you want to renovate an older property, held by your self managed super fund, using borrowed funds, then you have to be careful that you do not “improve” the property.

This means you’ll need to look at some other options.

You can go nuts with renovating and growing the value of your property if you fund the renovations through surplus cash that’s also held in your do-it-yourself super fund.

This can be a fantastic strategy to not only grow the capital value of your asset, but it may also allow you to charge a higher rent on the property, and therefore increase cash flow to your fund.

Remember if you take this approach, you may have a period without tenants and that means without rental income, so don’t use all your cash on the renovations.

Make sure you keep at least 10 per cent of the fund’s assets in cash to keep the bank happy, and that you’ve got enough on top of that to fund the mortgage payments whilst you’re not charging rental income.


If you don’t have the money right now, there might be some other work you can do to keep your property looking fresh.

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. Painting your house or replacing the guttering for example.


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.

Repairs might include, 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, improving the quality of existing features like renovating the bathroom, or changing the rights to the property.

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