Buying your business premises: through your SMSF or through a company?

The appeal is easy to see. Your business pays rent every month, and that rent could be going to an entity you control rather than a landlord. The question is which entity. Buying through a self-managed super fund and buying through a company both get you out of a landlord relationship, but they lead to very different places on tax, borrowing, renovations and, most importantly for a business owner, whether that building can help you raise money later.

This page compares the two structures from a lending point of view. It isn’t a substitute for advice from your accountant or a licensed SMSF adviser, who will look at your balances, ages and tax position. It should help you go into that conversation knowing which trade-offs matter.

The two structures side by side

	Self-managed super fund	Company (often a separate property-holding company)
Who can it buy from?	Unrelated sellers, or a related party if it’s business real property at market value	Anyone, subject to normal tax rules
Lease to your own business?	Yes, on commercial terms at market rent	Yes
How it borrows	Limited recourse borrowing arrangement (LRBA) only, with the property held in a separate holding trust	Ordinary commercial loan, full recourse, often with director guarantees
Typical lender appetite	Fewer lenders, lower share of value, more scrutiny	Wide choice: banks, non-banks, private lenders
Renovations with borrowed money	Repairs yes, improvements no	No restriction
Use as security for other borrowing	Generally not allowed	Yes, including for the trading business
Tax on rent	15% in accumulation phase, potentially nil in retirement phase	25% (base rate entity) or 30%
Tax on a sale gain	One-third discount if held over 12 months	No CGT discount for companies
Access to the money	Locked until a condition of release, such as retirement	Available to the company, subject to tax on distribution

Why does the SMSF route appeal?

Tax. Rental income inside a fund in accumulation phase is taxed at 15%, and a capital gain on a property held for more than a year gets a one-third discount, an effective 10%. Once members move into retirement phase, income supporting those pensions can be tax-free within the transfer balance cap. Over a long holding period on a growing asset, that gap compounds.

The related-party exception. Super law generally stops a fund buying assets from members and their associates. Business real property is one of the specific exceptions, provided it’s at market value. That’s what lets an owner sell premises they already hold personally into their fund, or have the fund buy from a business partner. The ATO’s ruling SMSFR 2009/1 sets out what counts: broadly, land and buildings used wholly and exclusively in a business. Property used only briefly in a business around the purchase doesn’t qualify.

Rent goes to your retirement. Instead of paying a landlord, the business pays market rent to the fund. That rent builds the members’ balances.

One recent change for large balances: from 1 July 2026, an additional tax applies to earnings attributable to total super balances above $3m. If your balance is near that level, factor it into the modelling.

Where does the SMSF route bite?

Limited recourse borrowing. If the fund borrows, the lender’s claim is limited to the property itself. Lenders price and size that risk conservatively, so many SMSF loans need a bigger deposit than a company purchase would, and fewer lenders offer them. Our page on SMSF commercial property loans covers what lenders ask for.

One asset, no improvements. The ATO’s LRBA rules say borrowed money can’t be used to improve the asset, only to repair and maintain it. The fund’s own cash can pay for improvements, but not if the work turns the property into a different asset. A strata unit you want to refit and extend, or a block you plan to develop, is awkward inside super.

It can’t back the business. This is the one owners most often miss. Apart from the LRBA used to buy it, a fund can’t generally give a charge over its assets. So the building your business trades from can’t be offered as security for a business loan, an overdraft or an equipment facility. If the business later needs $300k to buy out a partner or clear a tax debt, that equity isn’t available to it.

The money is in super. When trading turns difficult, the fund can’t lend to it or hand money back to you before you meet a condition of release. Rent must also stay at market rates; letting it slide in a tough year creates a compliance problem.

Why does the company route appeal?

Borrowing flexibility. A company can borrow from banks, non-banks or private lenders on ordinary terms, refinance, top up and draw down equity later. If lending conditions shift or the business grows, the property can do more work.

Property as a funding engine. Equity in company-held premises can secure a second mortgage or a fast caveat loan for the trading business. For many owners, that’s the single most valuable feature of owning their premises.

No restrictions on works. Fit-outs, extensions, subdivisions and redevelopment can all be funded with borrowed money.

Money isn’t locked away. Rent profits stay within the company, and you can pay them out as dividends, with franking credits attached, when it suits.

Where does the company route bite?

Higher tax, and a catch on the lower rate. The 25% company rate applies only to base rate entities, and one of the tests is that no more than 80% of assessable income is passive income such as rent. A company that only holds property will usually fail that test and pay 30%. Companies also get no CGT discount on a sale gain, so the full gain is taxed.

Asset protection depends on structure. If the same company owns the building and runs the business, trading creditors can reach the property. Many owners use a separate entity, often a trust with a corporate trustee, to hold property. Ask your accountant which arrangement fits; the corporate trustee entry explains the basics.

Guarantees. Lenders to a property company usually ask directors to guarantee the loan, so the debt can reach you personally.

Not sure which structure lenders would back for your purchase? Share the deal with us. Sending it takes about sixty seconds, and your credit history stays untouched.

An illustrative example

Two business partners run a Brisbane engineering firm and want to buy their $1.6m warehouse. Their combined fund has $900k, mostly in cash and shares. Both are in their late forties.

• Through the SMSF: the fund uses $640k of its cash and borrows the rest under an LRBA. The firm pays market rent to the fund, taxed at 15%. But the partners already know they’ll want a mezzanine office in two years, and the fund can’t borrow for that. And the property can’t back the $400k equipment upgrade they’re planning.
• Through a property company or trust: a lender advances a larger share of the value, guaranteed by the partners and secured over the warehouse. Rent is taxed at a higher rate. But the mezzanine can be financed, and equity in the building can later secure equipment or working capital borrowing.

Neither answer is wrong. If the priority is retirement wealth and the building’s use is settled, the fund route is strong. If the property is part of the business’s growth plan, the company route keeps options open. Use the LVR calculator to see how different deposit sizes change the loan.

Where do banks fit in?

Banks are often the best-priced lenders for both structures when your application fits their policy, and several offer SMSF property lending alongside standard commercial loans. If your bank offers a sensible deal, take it seriously. Where things get harder is a large deposit shortfall, a tight timeline to settlement, mixed-use or specialised property, or a business with patchy financials. Non-bank and private lenders, and short-term options like bridging finance, fill those gaps for company purchases. Our guide to buying your premises versus leasing covers whether to buy at all.

A checklist before you choose

1. Is the property business real property, and will it stay that way? Mixed residential and commercial use can rule out the SMSF route.
2. Will you want to borrow against it for the business? If yes, lean towards a company or trust.
3. Do you plan improvements or development? Borrowed money inside an SMSF can’t fund them.
4. How much is in super, and how close are you to retirement? The tax advantages grow with time and with retirement phase.
5. What deposit can each structure provide? Check the deposit on business property options.
6. Have your accountant and an SMSF specialist modelled it? The right answer depends on numbers this page can’t see.

Buying through a company and need the money to line up?

Choosing a structure is half the job; getting a lender comfortable with it before settlement is the other half. If your purchase is going through a company or trust and you need a deposit top-up, a bridge to settlement or funding against other property, we can help find a path.

Enquiring takes roughly a minute and won’t leave a footprint on your credit report. We don’t pass your file around to a long list of lenders. Someone on our team reads the details and phones you personally. Give us the real purchase price, deposit and timeline, because the right lender is the one that can still settle on your date.

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