Can an SMSF loan buy a farm with a house on it? Farm with a homestead

Q: Can an SMSF loan buy a farm with a house on it?

Yes, under the 2‑hectare rule: a primary production property can include a home on 2 hectares or less, as long as living there isn’t the main use. Property used in a primary production business can include a dwelling and still count as business real property, if the area used for private or domestic purposes is no more than 2 hectares. The main use of the whole property also can’t be private or domestic. The farm has to do the work.

Passes, under the 2‑hectare rule.

3 of 3 rooms count as business

The homestead stays dark, and the farm still passes.

Room by room

Hay shedBusiness
Machinery shedBusiness
Homestead, 2 ha or lessAllowed: 2 ha or less

New SMSF loan: Allowed, under the 2‑hectare rule
Cash: Allowed

Why

Property used in a primary production business can include a dwelling and still count as business real property, if the area used for private or domestic purposes is no more than 2 hectares.

The main use of the whole property also can’t be private or domestic. The farm has to do the work.

What you can do

Check that the home and its private land take up 2 hectares or less.
The farm has to be a real primary production business, and stay one for the life of the loan.