Using an SMSF to purchase commercial premises for your business

For business owners, deciding whether to buy or lease their commercial premises is an important financial consideration. One option is to purchase the property through a self-managed super fund (SMSF), allowing the business to lease the premises while the property is held as part of the owner's retirement savings.

There are potential benefits to this approach, but also costs, risks and strict rules to consider.

What is an SMSF?

An SMSF is a retirement savings structure that provides individuals and groups with more control. The members of an SMSF are also its trustees, which means they have the responsibility to make decisions about the fund and comply with the legal and regulatory requirements. SMSFs can be used to hold a range of investments, including shares, term deposits, managed funds and property – including your own business premises.

What are the potential benefits of purchasing commercial premises through an SMSF?

Tax benefits

Rental income generated from commercial premises held within a complying SMSF is generally taxed at 15% during the accumulation phase. Capital gains may also receive concessional tax treatment, depending on how long the property has been held and whether the fund is supporting retirement-phase pensions when the property is sold.

Asset protection

Assets held within a compliant SMSF may benefit from certain protections from creditors in the event of business difficulty or legal disputes. However, the protection from creditors for assets held within a complying SMSF is fact-dependent and not guaranteed. Transactions intended to defeat creditors may be challenged, and bankruptcy clawback rules may apply. Creditor protection should not be a primary reason for establishing or using an SMSF. Specialist legal advice should be obtained based on your circumstances.

Flexible leasing arrangements

Business owners may enter a lease agreement with their SMSF, allowing their business to pay rent to the fund and potentially claim it as a tax deduction. This creates an additional income stream for the SMSF, provided the property qualifies as business real property and the lease is conducted on commercial terms.

Control over investment decisions

SMSF trustees have direct control over investment decisions relating to the property, including its selection, management and leasing arrangements, subject to the fund's investment strategy and legal obligations.

Potential for capital appreciation

Like any property investment, commercial premises may increase in value over time, potentially contributing to retirement savings. However, property values can also fall, and capital growth is never guaranteed.

What changed for SMSF property borrowing in August 2026?

From 10 August 2026, SMSFs can no longer enter into new limited recourse borrowing arrangements to purchase residential property⁽¹⁾. However, borrowing to purchase eligible commercial premises remains an option.

Business owners can still use an SMSF to borrow to purchase an office, warehouse, shop or other commercial premises, provided the property qualifies as business real property and the borrowing arrangement complies with SMSF rules. Broadly, business real property refers to land and buildings used wholly and exclusively in one or more businesses.

Importantly, SMSFs can still purchase residential property outright using available fund cash, subject to existing investment rules. The new restriction applies to borrowing for residential property, not ownership of the property itself.

Things to consider before making a move

Understand the costs and risks

The expenses associated with property investment, including stamp duty, acquisition fees, legal costs and maintenance expenses, should be thoroughly analysed. Additionally, investors should be aware of the diversification risks involved in holding a significant portion of their retirement savings in a single asset. Any property purchase needs to align with the documented Investment Strategy for the SMSF.

It's also worth considering how the SMSF would cover ongoing expenses or loan repayments if the property were vacant or rental income stopped.

Familiarise yourself with compliance requirements

It's essential to comply with SMSF rules and regulations, as non-compliance can result in penalties, disqualification or even prosecution. The property purchase needs to meet the sole purpose test, meaning it must be maintained to provide financial benefit to members upon retirement.

A key requirement for business owners going down this path is that property expenses must be appropriately met by the SMSF, and rent must be paid on commercial terms and at market rates into the SMSF. This is known as an ‘arm’s length’ arrangement.

Additional requirements when borrowing to purchase

SMSFs can borrow to acquire eligible commercial property through a limited recourse borrowing arrangement (LRBA), subject to strict conditions.

Under an LRBA, the lender's recourse against the SMSF is generally limited to the acquired asset. The acquired asset must be held by a separate holding trustee under a complying holding trust arrangement, commonly called a bare trust, until the borrowing is repaid.

The arrangement must generally involve a single acquirable asset purchased in one transaction. Borrowed funds cannot be used to purchase vacant land and subsequently construct a building, undertake substantial development or change the property's fundamental character.

These restrictions make it particularly important to assess the suitability of the property and borrowing structure before committing to a purchase.

Engage professional advice

Purchasing commercial premises through an SMSF can be an effective strategy for some business owners, but it will not suit every business or retirement plan.

The decision should consider your broader financial position, business requirements, retirement objectives and capacity to meet the fund's ongoing obligations.

Professional financial, legal and tax advice can help determine whether the strategy is appropriate and ensure the purchase is structured correctly.

Is purchasing commercial premises through your SMSF right for you?

Owning your business premises through an SMSF may offer tax advantages, greater control and an opportunity to build retirement wealth. However, these potential benefits need to be weighed against the costs, investment risks and strict compliance requirements.

If you're considering purchasing commercial premises through your SMSF, speak with the team at Apt Wealth Partners about your options.

(1) Existing LRBAs, refinancings of pre-10 August 2026 LRBAs, and binding acquisition contracts exchanged before that date are unaffected.

General Advice Warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs.  It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Group of Companies which includes Apt Wealth Partners (AFSL and ACL 436121), Apt Wealth Finance (a Trading name of Apt Wealth Partners), Acceptance Finance (ACL 391715) and Acceptance Finance Australia Pty Ltd (a Corporate Credit Representative of Acceptance Finance - Credit Representative Number 580562) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.

Apt Wealth Partners is an incorporated financial services licensee. Our partners or their associated entities are shareholders in the Apt group parent company.