Can My SMSF Buy My Business Premises?

Yes — your Self Managed Super Fund (SMSF) can buy your business premises, provided it meets certain legal and compliance conditions. This strategy has become a popular strategy for small business owners and family-run businesses looking to combine smart investing with long-term stability.

But before your SMSF acquires commercial property, it’s essential to understand how it works, what rules apply, and how to avoid costly mistakes.

Why Buy Property Through Your SMSF?

Purchasing commercial property through your SMSF allows you to:

• Pay rent to your super fund rather than a landlord — growing your retirement benefits
• Secure your own business premises long-term
• Benefit from asset protection, as the SMSF owns the asset, not you personally
• Enjoy potential tax benefits (e.g., concessional tax on rental income and capital gains)

This is especially attractive to business owners who want to buy medical premises, offices, or warehouses used by their trading entity.

Key Requirements & Rules

To buy your business real property using your self managed super, you’ll need to meet the following criteria:

1. The Property Must Be Business Real Property

Your SMSF property must be classified as commercial property, not residential property. This includes offices, industrial premises, and retail spaces.

2. Lease Back to Your Own Business Is Allowed — with Conditions

Your trading entity can lease the commercial premises from your SMSF, even though it’s a related party. However:

• There must be a formal lease agreement
• Rent must be at market rate
• Payments must be consistent and on time

This ensures compliance with the sole purpose test — that the fund exists only to provide retirement benefits to fund members.

3. It Must Be Purchased at Market Value

The purchase property price must reflect market value, validated by a professional valuer. The SMSF cannot overpay or underpay, especially in a related parties transaction.

Using a Limited Recourse Borrowing Arrangement (LRBA)

If your SMSF doesn’t have enough cash to make an outright purchase, it can still buy the property through a Limited Recourse Borrowing Arrangement (LRBA) — also known as a recourse borrowing arrangement LRBA.

With this strategy:

• A separate entity (bare trust) holds the asset on behalf of the SMSF until the loan is repaid
• Only the SMSF assets related to the purchase are at risk
• The property loan must meet strict superannuation rules

Your investment strategy must also allow for property, and the SMSF trust deed must permit borrowing.

Risks and Considerations

While this is a sound strategy for many, it’s not without risks:

• Liquidity concerns – Property is illiquid, and you must ensure sufficient liquidity in your SMSF portfolio to meet expenses
• Higher costs – There may be extra legal fees, loan repayments, strata fees, and property expenses
• Compliance burden – Breaching the sole purpose rule, paying below market rates, or failing to lodge rent on time can trigger ATO penalties

Careful planning with a financial adviser or SMSF specialist accountant is critical.

Step-by-Step: How to Buy Commercial Property Through Your SMSF

1. Review your SMSF trust deed and investment strategy
2. Seek financial advice from an accountant or financial planner to assess suitability and cash flow
3. Identify the right business property
4. Get an independent valuation
5. Set up a bare trust if borrowing is required
6. Finalise a formal lease agreement at market rate
7. Complete the purchase, ensuring proper documentation and payment of stamp duty
8. Maintain compliance and review your SMSF annually

Should You Buy Your Business Premises Using Your SMSF?

Buying your commercial property through an SMSF may be a great move if:

• You run your own business and want to secure long-term premises
• You're focused on building a stable retirement strategy
• You want to maximise tax benefits and generate consistent rental income

However, it requires careful planning, a strong understanding of superannuation rules, and the help of professionals.

Talk to the Experts

At Causbrooks Finance, we’ve helped dozens of business owners navigate buying commercial property through their SMSF. Whether you're considering an outright purchase or setting up an LRBA, we help ensure your structure is fully compliant — and aligned with your retirement goals.

Book a free strategy session with our SMSF lending team today.