For business owners, one of the most effective SMSF strategies is also one of the simplest to understand once you see it laid out: using your fund to own the commercial property your business operates from. It is a strategy that connects your super, your business, and your long-term wealth in a single, coordinated structure, and it remains fully available under current superannuation law, including following recent changes to residential property borrowing rules.
What Is Business Real Property?
Business real property generally refers to land and buildings used wholly and exclusively in a business. For an SMSF, this distinction matters significantly, because business real property is treated differently to residential property under superannuation law, particularly in relation to related party transactions and the in-house asset rules.
How the Strategy Typically Works
An SMSF can purchase a commercial property outright using existing fund balances, or use a Limited Recourse Borrowing Arrangement to help fund the purchase, with the lender’s recourse limited to that specific property. A common approach for business owners is for the SMSF to purchase the premises the member’s own business operates from, then lease it back to the business at a genuine, arm’s length market rent.
This structure means the rent your business already pays for its premises, money that would otherwise go to an unrelated landlord, is effectively being paid into your own superannuation instead.
Why This Strategy Remains Attractive Following the LRBA Changes
Legislation banning new residential LRBAs took effect on 10 August 2026, closing off residential property borrowing within SMSFs. Commercial property, including business real property, is entirely unaffected by that change. If anything, this shift has sharpened the relative attractiveness of the commercial property pathway for business owners specifically.
Why Business Owners Use This Strategy
- It builds retirement savings using cash flow the business is already generating through rent payments
- It can provide long-term security, since the fund controls the property your business depends on to operate
- Commercial property can offer a different risk and return profile compared to the fund’s other investments, supporting genuine diversification
- It ties directly into succession planning, since the property and the business can be dealt with separately when you eventually exit
What Needs to Be Right Before You Proceed
- The lease between the SMSF and the business must be on genuine commercial terms, including a properly assessed market rent
- Valuations need to be current and properly evidenced, both at purchase and for ongoing annual reporting
- If borrowing is involved, the LRBA needs to be structured correctly from the outset, and a corporate trustee structure is generally required or strongly preferred by lenders
- The fund’s investment strategy needs to genuinely reflect the property holding, including an honest assessment of its liquidity impact
The Trustee Structure Question
Because lenders generally require or strongly prefer a corporate trustee structure where an SMSF is borrowing to acquire property, this is often the point at which funds that started with individual trustees need to reconsider their structure. Getting the trustee structure right before entering into a commercial property purchase avoids the cost and complexity of retitling the property later.
How New Wave SMSF Helps
Our accounting, financial planning, and legal teams, alongside trusted valuers, mortgage brokers, and conveyancers, work together on commercial property strategies from the initial suitability assessment through to settlement and ongoing compliance.
Frequently Asked Questions
Can my SMSF still borrow to buy commercial property in 2026?
Yes. The residential LRBA ban that took effect on 10 August 2026 does not affect commercial property, including business real property.
Does my SMSF need a corporate trustee to buy commercial property with borrowing?
It is not always a strict legal requirement, but lenders generally require or strongly prefer a corporate trustee structure for SMSF borrowing arrangements.
What rent should my business pay to lease property from my own SMSF?
The lease must be on genuine, arm’s length commercial terms, meaning a properly assessed market rent, not a discounted or informal rate.
Can my SMSF own a mix of commercial and residential property?
An SMSF can hold different asset types, but as of 10 August 2026, new borrowing arrangements to acquire residential property are no longer available.
What happens to the commercial property if I sell my business?
This depends on your specific circumstances and should be planned as part of your succession strategy.
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This article is general information only and does not take into account your personal objectives, financial situation, or needs. It does not constitute financial, tax, or legal advice. Commercial property strategies within an SMSF need to be assessed against your fund’s specific circumstances by a qualified adviser. New Wave Financial Planning Pty Ltd is an Authorised Representative of NWG Financial Services Pty Ltd, AFS Licence No. 538619. Please speak with your New Wave SMSF adviser before acting on any information in this article.