SMSF Commercial Property Loans: Buy Your Business Premises in Super
If you run a business and you’re paying rent to a landlord, there’s a better arrangement available to you. Buy your premises through your SMSF. Lease them back to your business at market rent. That rental income goes into your super fund, taxed at 15% instead of your marginal rate. When you sell, capital gains may be taxed at 10%, or potentially zero in pension phase. Every dollar of rent you pay stops enriching a landlord and starts building your own retirement.
We’ve been structuring SMSF commercial property loans for over 20 years. As part of the YML Group, we have in-house accountants, financial planners and YML Legal (NSW Law Society Practice ID 40220) handling the bare trust, the LRBA compliance and the entity structure, in the same building, as part of the same team. Call Jay on 0425 228 882. No broker fee in most cases.
How It Works
SMSF property loans are structured as Limited Recourse Borrowing Arrangements (LRBAs). The SMSF borrows from a commercial lender to purchase the property, which is held in a bare trust during the loan term. The SMSF makes repayments from fund income, rental receipts and member contributions. When the loan is paid down, the asset transfers from the bare trust into the SMSF directly.
The limited recourse structure means the lender’s rights in a default are limited to the property held in the bare trust, other SMSF assets aren’t at risk. That protection is why LRBAs are permitted under superannuation law, and why lenders charge a premium above standard commercial rates. The bare trust documentation must be correct before settlement, ATO requirements are specific, and lenders have their own legal requirements on top of that. YML Legal handles this as part of the YML Group service.
What Property Can Your SMSF Buy?
Any commercial property that satisfies the sole purpose test, meaning the investment exists to provide retirement benefits to fund members. In practice: office premises, retail shops, medical and allied health suites, industrial units and warehouses. Your SMSF can lease the property to your business at arm’s-length market rent, provided the rent is genuinely at market rate. An independent rental appraisal at commencement and each renewal is the practical requirement.
One honest note for Byron Bay business owners: SMSF commercial lenders are more conservative than standard commercial lenders in their asset type acceptance. Standard commercial assets, offices, medical, retail, industrial, are accepted by most SMSF commercial lenders. Non-standard assets like glamping resorts or wellness retreats on acreage are a smaller market within SMSF lending. We’ll tell you upfront what lender appetite looks like for your specific property.
The Tax Advantage: In Plain Terms
- Rental income received by the SMSF: taxed at 15% in accumulation phase
- Capital gains on sale after 12 months: taxed at 10% in accumulation phase
- Capital gains in pension phase: potentially tax-free
- Your business rent: fully deductible as a business expense, just as before
- Your own tenancy: secured, no landlord-imposed rent spikes or forced relocation
Loan Details
SMSF commercial LVRs typically run 60–70% of property value, lower than SMSF residential lending, which can reach 80%. Interest rates are higher than standard commercial rates; the limited recourse structure increases lender risk and is priced accordingly. Most lenders require $200,000–$250,000 remaining in the fund after the deposit is paid. There are currently around five to seven active SMSF commercial lenders, primarily non-bank and specialist. We have relationships with all of them and know their credit policies in detail.
SMSF Commercial Property Loan Requirements
Before approaching a lender, your fund generally needs the following in place. We check all of this with you at the first conversation, at no cost.
- An established SMSF with a current investment strategy that specifically permits commercial property investment and borrowing
- A minimum fund balance of around $200,000–$250,000 remaining after the deposit is paid (varies by lender)
- A corporate trustee structure, strongly preferred by most SMSF commercial lenders
- A compliant bare trust and corporate trustee established before contracts are exchanged
- A property that satisfies the sole purpose test
- Any related-party lease set at arm’s-length market rent, supported by an independent rental appraisal
- Sufficient rental income and member contributions to service the loan from within the fund
Business Real Property Strategy
The most common reason business owners use an SMSF commercial property loan is to buy the premises their own business operates from, then lease it back at market rent, turning rent they’d otherwise pay a landlord into a retirement asset. For a full walkthrough of this and other business real property strategies, read our SMSF property investment strategy guide.
The Process
More steps than a standard commercial purchase. The SMSF must have a compliant investment strategy permitting commercial property. The bare trust must be established before settlement, in practice, before you exchange contracts. The fund’s accountant confirms compliance. The lender runs both a compliance assessment and a standard commercial credit assessment. It’s a lot to coordinate.
The YML Group manages all of it: YML Finance for the lending, our accountants for the SMSF compliance, YML Legal for the bare trust documentation. One team, one set of conversations. That coordination makes a real difference to how cleanly these transactions run, SMSF commercial deals coordinated across separate professional relationships regularly hit delays and structural issues that cost real money to fix.
Common Questions
Can my SMSF buy the property my business is already leasing?
Yes, this is one of the most common scenarios. Your SMSF purchases the premises your business currently occupies. Your business enters a commercial lease with the SMSF at market rent. The transition needs careful handling to manage stamp duty and other costs. YML Legal advises on the process as part of the YML Group service.
Does my SMSF need to be established first?
Yes, and with enough balance to meet minimum fund requirements and make the deposit. If you don’t have an SMSF yet, the YML Group can advise on establishment. If you have an existing fund, we’ll assess whether it’s ready for commercial property lending before you go to contract.
Can I use my SMSF to buy commercial property in Byron Bay?
Yes. SMSF lending is assessed nationally. Standard commercial assets in Byron Bay, retail, office, medical, industrial, are accepted by most SMSF commercial lenders. Non-standard Byron Bay asset types face a narrower lender market. Call us to discuss your specific property.
Can my SMSF still buy residential property?
Yes, but only with cash. From 10 August 2026, an SMSF can no longer borrow, through a new limited recourse borrowing arrangement, to buy residential property. If your fund has enough capital, it can still purchase residential property outright, without borrowing. Borrowing inside super for a new purchase is now limited to business real property, which is what this page covers. This is general information only; talk to a licensed financial adviser about whether either option suits your fund.
What happened to SMSF home loans?
From 10 August 2026, new SMSF home loans, residential limited recourse borrowing arrangements, are no longer available under section 67A of the Superannuation Industry (Supervision) Act 1993. If your SMSF already has a residential LRBA in place, it’s fully grandfathered and unaffected, and refinancing an existing residential SMSF loan is still available. Visit our page for existing SMSF home loan clients if this applies to you. New SMSF borrowing is now focused on business real property, which this page covers.
Call Jay, 0425 228 882
YML Finance | ACL 398415 | MFAA Member 20+ Years | SMSF Commercial Specialist
General information only. Not financial product advice, tax advice or legal advice. SMSF decisions require a licensed financial adviser, registered tax agent and legal practitioner. Acctpro Finance Pty Ltd ACL 398415. YML Legal Pty Ltd provides legal services separately from YML Finance.