Fractional Investment
Own a Share, Not the Whole Property
For funds with a smaller balance, fractional investment offers a way into property with no borrowing required at all.
What Is Fractional Property Investment?
Instead of buying an entire property outright, your SMSF acquires a share of one — sometimes described as “brick” investment, after platforms that literally divided a property into thousands of purchasable units. A group of investors, which can include other SMSFs, pool their capital to own a single property between them, with returns and costs split according to each investor’s share.
No LRBA, no bare trust, and no borrowing capacity required — which is exactly why fractional has become a more prominent option since new residential LRBAs stopped being available.
Why This Fits the Post-LRBA Landscape
Not every fund has enough capital to buy a residential property outright, and not every fund wants to take on a commercial loan. Fractional sits between those two paths — a genuine entry point for funds with a smaller balance that still want direct exposure to property, without needing to save up for years first or take on debt.
The Structures Aren’t All the Same
“Fractional” describes the outcome, not a single legal structure — and which structure your SMSF actually holds matters for compliance. The main variations you’ll see:
- Tenants in common — your SMSF’s name (or your name as trustee) appears directly on the property title alongside the other co-owners. You hold a genuine legal interest in the physical asset.
- Units in a unit trust — your SMSF owns units in a trust that in turn owns the property, rather than holding a direct title interest. This is how established platforms like DomaCom operate, typically via a registered Managed Investment Scheme.
- Interest in a managed investment scheme (MIS) — a regulated financial product under the Corporations Act. If a provider is offering this, they need to be appropriately licensed, and you should expect a Product Disclosure Statement.
These aren’t interchangeable, and the legal ownership, valuation approach, fees and exit terms should all be checked before your fund commits capital.
The related-party lesson worth knowing: in Aussiegolfa Pty Ltd v Commissioner of Taxation, an SMSF’s fractional unit trust investment was leased to the member’s daughter — a related party. At first instance the Federal Court found this breached the sole purpose test, but on appeal the Full Federal Court overturned that finding, ruling that leasing to a related party on genuine market terms, without evidence of a collateral purpose, didn’t breach the sole purpose test. The Court still upheld a separate finding that the specific sub-fund structure counted as an investment in a “related trust” — an in-house asset issue. The ATO’s decision impact statement sets out its view in full. The lesson: fractional ownership doesn’t loosen the related-party rules — both the purpose behind the lease and the specific structure you’re invested in need to hold up.
Is Fractional Right for Your Fund?
It tends to suit funds that:
- Have a smaller balance and want to start with a modest amount rather than wait to save a full deposit
- Want to avoid borrowing entirely — no LRBA, no bare trust, no gearing risk
- Would rather diversify across a share of several properties than hold one outright
- Are comfortable with less control over property decisions in exchange for a lower entry point and shared management
If your fund is fully cashed up and wants full ownership, our Residential (Cash Purchase) path may suit better. If it has a deposit and wants to keep using leverage, Commercial Property is worth a look. Not sure which fits? Our SMSF Pathfinder takes 30 seconds and points you in the right direction.
Where to Explore Fractional Opportunities
Live fractional investment opportunities — current properties, entry amounts and returns — are managed through our partner arrangement at propertnetwork.com.au, rather than duplicated here. That’s where you’ll find the actual investment options to review.
View current fractional investment opportunities →
This is general information, not personal financial or legal advice. Fractional property structures vary — the legal ownership, compliance obligations, fees and exit terms differ between providers and structures. Speak with your accountant or financial adviser before committing SMSF capital to any fractional arrangement.