Buying Your Business Premises Through Your SMSF: Tax Benefits, Costs and Risks

How buying your premises through your SMSF works

The fund buys the property, from an unrelated seller or from you at market value. It pays with its own cash or with a loan under a limited recourse borrowing arrangement. The fund then leases the premises to your business under a written lease at market rent, and your business pays rent into the fund's bank account like any other tenant. Our SMSF commercial property loans page covers the lending side.

• The property must be business real property. Zoning is not enough. It must be used wholly and exclusively in one or more businesses.
• The lease should be in writing on commercial terms, with rent supported by a valuation or rental appraisal.
• Rent must actually be paid on time. A fund that lets a related tenant fall behind has a compliance problem.
• The purchase must fit the investment strategy, including diversification, liquidity and the ability to pay benefits.

Anything borderline needs licensed SMSF advice before a contract is signed. That includes a shop with a dwelling, a building with mixed business and private use, and farm land with a house. If the property is not business real property, the fund cannot buy it from you, generally cannot lease it to your business, and cannot borrow to acquire it. See how SMSF property loans work for the loan structure.

The tax and structural benefits in general terms

Rent and capital gains

Rent your business pays is generally deductible to the business, the same as rent paid to any landlord. In the fund, the rent is income. After deductions such as loan interest, rates, insurance and commercial property depreciation, a complying SMSF pays 15% on the net amount in accumulation phase. If the rent is not at market, the income can be taxed at the top marginal rate instead.

If the fund sells the property after owning it for at least 12 months, a one third discount applies to the capital gain, so the effective rate in accumulation phase is 10%. If the property is supporting retirement phase pensions when it is sold, the gain can be exempt. The amount each member can hold in retirement phase is limited by the transfer balance cap, generally $2.1 million for 2026-27.

Balances above $3 million

From 1 July 2026 an additional tax applies to the share of earnings relating to a member's total super balance above $3 million. It is assessed to the member. A valuable property can push balances towards that threshold over time. Our Division 296 page explains it in general terms.

Asset protection

Assets in a complying super fund are generally protected from a member's creditors in bankruptcy, which can keep the premises separate from business risk. The protection has limits. Contributions made to defeat creditors can be clawed back, and personal guarantees given to a lender sit outside it. Get legal advice before relying on it.

Worked example: renting from a landlord vs renting from your own fund

A business rents a $1,000,000 warehouse for $60,000 a year plus outgoings. In one scenario it keeps renting from an unrelated landlord. In the other, the members' SMSF buys the warehouse with $400,000 of fund cash and a $600,000 loan at an illustrative 7.5% over 15 years, then leases it to the business on the same terms. Repayments are about $5,562 a month, or $66,745 a year. In year one, $44,237 is interest and $22,508 is principal.

The business is in the same position in both columns. With a third party landlord the $60,000 is gone. With your own fund it pays the interest and costs, and $22,508 reduces the debt on a building your super owns. The catch is that at this gearing the rent does not cover principal and interest repayments, so the fund needs about $12,509 from contributions or reserves in year one. A fund that owned the building outright would have no shortfall, but far more of its balance in one asset.

Putting premises you already own into the fund

If you or a related entity already own the premises, business real property is one of the few assets the fund can acquire from you. The fund can buy it at market value using cash or an LRBA. Or you can contribute the property, or part of its value, as an in specie contribution, which means transferring the asset itself instead of cash. Our help centre covers whether your SMSF can buy your business premises from you.

• An independent valuation is essential. The transfer must be at market value and the auditor will ask for evidence.
• An in specie contribution counts towards your caps. The non-concessional cap is $130,000 for 2026-27, or up to $390,000 under the bring-forward rules for eligible members.
• The transfer is a disposal, so capital gains tax can apply to the seller, whether you, your company or your trust.
• An existing mortgage has to be dealt with. The fund cannot take over your personal loan.

The small business CGT concessions may reduce or remove the seller's capital gain, and in some cases allow proceeds to be contributed to super under a separate lifetime limit. The tests are detailed and the order of steps matters, so see your accountant well before anything is signed. Health professionals can also read buying your rooms through an SMSF.

GST and stamp duty on the purchase and the rent

Sales of commercial property are generally subject to GST unless the sale qualifies as a GST-free going concern or another concession applies. A fund registered for GST can usually claim the GST back as a credit, but has to fund it at settlement first. Lenders commonly lend against the GST exclusive value, and stamp duty is generally calculated on the GST inclusive price.

An SMSF must register for GST if its GST turnover, which includes commercial rent, is $75,000 a year or more. Below that, registration is optional. A registered fund charges GST on the rent, and a registered business tenant generally claims it back. Agree the GST position with your accountant before the contract and lease are drafted.

Stamp duty applies to a purchase at the normal rates for your state. Where you transfer your own premises into the fund, some states offer concessional duty if strict conditions are met, and others charge full duty on market value. Have your solicitor confirm the duty before you commit, because it is often the largest cost of the transfer.

The costs and risks of holding your premises in super

The main risk is concentration. Your income, your business and a large share of your retirement savings depend on one property and one tenant, and the tenant is you. If the business struggles, the rent and your capacity to contribute are at risk together. The fund also carries SMSF running costs, and higher interest rates and fees than a standard commercial loan if it borrows.

Flexibility is also lower than owning the premises yourself. The property cannot secure business borrowing, borrowed money cannot fund improvements while an LRBA is in place, and money in super generally stays there until you meet a condition of release.

Who it suits and the alternatives

This structure tends to suit established businesses with stable premises needs, members whose combined super can keep a real cash buffer after the purchase, and owners several years from retirement. It suits poorly where the business is new, the premises may be outgrown, or the purchase would take nearly all of the fund.

The main alternative is buying outside super, in your own name, a company or a trust. You give up the fund's tax rates, but you can use the equity for the business and renovate or sell without super law in the way. Our guide to buying your business premises and the commercial property loans hub compare those options. Have an accountant and a licensed SMSF adviser run both versions first.

Common mistakes with business premises in an SMSF

These are the problems auditors and lenders see most often with related party leases.