SMSF commercial property loans: buying business premises through your super

For years, SMSF property borrowing was dominated by residential investment. That changed on 10 August 2026. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, a new limited recourse borrowing arrangement can only be used to buy real property if that property is business real property. Commercial premises, the kind a business trades from, are now the main route for an SMSF that wants to borrow to buy property.

For business owners, that sharpens a long-standing strategy: your fund buys the premises, your business leases them back, and rent flows from the business into your super.

What changed in August 2026, and who it affects

According to the ATO, the change applies to new arrangements. It does not affect:

• funds that exchanged a binding contract to buy real property before 10 August 2026, even if settlement happens later;
• existing LRBAs, which can continue as they are.

LRBAs haven’t been banned, and SMSFs can still borrow to buy other permitted assets. Where commentators differ is on the detail of refinancing existing residential loans, so if your fund already has a residential LRBA, read the ATO guidance carefully and get your SMSF adviser’s view before changing lenders.

How an SMSF property loan is structured

An LRBA has a few moving parts that make it different from an ordinary commercial loan:

1. The SMSF trustee borrows. Most funds that borrow use a corporate trustee, which lenders generally prefer, and the fund’s trust deed has to permit borrowing.
2. A holding trust owns the property. Legal title sits with a separate holding (bare) trust while the loan is outstanding; the SMSF holds the beneficial interest and receives the income.
3. Recourse is limited. If the loan fails, the lender can claim the property but not the fund’s other assets. Lenders compensate by asking for personal guarantees from the members, a bigger deposit and liquidity in the fund.
4. One asset per arrangement. The loan must fund a single acquirable asset. Several titles bought together may still count as one asset in some cases, but get that confirmed early.
5. Repairs yes, improvements no. Borrowed money can’t be used to turn the property into a materially different asset.

Why business owners buy premises through their fund

The appeal is the related-party lease. Business real property is one of the narrow exceptions that lets an SMSF buy an asset from a member’s related party and lease it back to a related business, provided everything happens at arm’s length.

In practice that means:

• the property must be used wholly and exclusively in a business, so a shop with a residential flat upstairs may not qualify;
• a written lease, market rent supported by an independent appraisal, and rent reviews that track the market;
• rent paid on time, every time. Missed or discounted rent can create compliance and tax problems for the fund.

Rent is generally deductible to the business, and the fund receives it in a concessionally taxed environment. Whether that beats buying in your company or trust depends on your contribution capacity, ages, debt and plans for the business. Our SMSF vs company purchase comparison sets out the trade-offs.

Weighing up an SMSF purchase against buying in your business? Describe the property and the plan and we’ll talk through what looks realistic.

What lenders look for

Lender focus	What they typically need
Fund structure	Trust deed allowing borrowing, corporate trustee, holding trust documents, ATO compliance status
The property	Valuation, zoning, lease terms, tenant quality (or your business as tenant)
Deposit and costs	Cash in the fund to cover the deposit, stamp duty, legal and trust set-up costs
Liquidity after settlement	A cash buffer left in the fund, so repayments survive a vacancy
Serviceability	Rent plus members’ regular super contributions covering the repayments
Guarantees	Personal guarantees from members or directors of the trustee company

Few major banks still offer SMSF lending, so much of this market is served by non-bank lenders and some smaller banks. Policies differ widely on minimum fund balance, loan size and the kind of property they’ll accept.

Related-party loans and the ATO safe harbour

Some members lend to their own fund instead of using a commercial lender. The ATO accepts this if the terms are consistent with an arm’s length dealing, and its safe harbour guidance for real property sets out terms it will accept, including a loan of no more than 70% of the property’s value, a maximum term of 15 years, monthly principal and interest repayments and a registered mortgage. Terms more generous than that risk the income being taxed as non-arm’s length income.

Costs to plan for

On top of the lender’s own establishment fee and interest, expect holding trust set-up, legal fees for both the loan and the purchase, a valuation, stamp duty, and ongoing accounting and audit costs for the fund. Compare lender offers in total dollars across the first five years rather than on monthly repayments alone. Our business loan repayment calculator helps with the repayment side once you have a quote.

Pros and cons

In favour: your rent builds your own retirement savings, the property sits inside a concessionally taxed fund, and the asset is generally protected from business creditors.

Against: a heavier deposit, fewer lenders, complex compliance, and money locked in super until you meet a condition of release. Restructuring or selling later can also be slower and costlier than in a company.

If the SMSF route doesn’t suit

• Buy in your business or a related trust with a standard commercial property loan.
• Lease for now and revisit buying later; our guide on buying your premises vs leasing weighs it up.
• Fund the deposit separately. If a company purchase needs a larger contribution, see funding for a deposit on business property.

Ready to look at your premises?

Owning the premises your business operates from ranks among the larger calls you’ll make as an owner, and the August 2026 change has pushed more owners to consider doing it through super. Whichever structure you land on, the starting point is the same: a realistic view of the deposit, the lender and the timeline.

The form is about sixty seconds of typing, and no credit report is pulled because you asked. We look at it ourselves rather than circulating it among lenders, and a specialist rings to discuss your fund and the property. Precise numbers for the fund balance, purchase price and expected rent let us point you somewhere sensible from the outset.

Start your premises enquiry →