From 10 August 2026, self-managed super funds can no longer borrow to buy residential investment property. That change has dominated the coverage, and it has left a lot of business owners with the impression that SMSF property is finished.
It is not. The ban applies to residential property only. Borrowing inside super to buy commercial property, including the premises your own business operates from, continues exactly as before. For a business owner currently paying rent, this is now the standout property strategy available inside super, and arguably a more compelling one than it was a month ago.
This guide explains how the strategy works, what the rules require, what it costs, and who it genuinely suits.
This article is general information only and does not take your personal circumstances into account. SMSF borrowing and related party leasing are tightly regulated. You should get licensed financial, tax and legal advice before acting.
The strategy in one paragraph
Your self-managed super fund buys the commercial premises your business operates from, using a deposit from your existing super balance and a loan for the balance. Your business then leases those premises back from the fund at genuine market rent. The rent remains fully tax-deductible to the business, exactly as it was when you paid a landlord. But now it flows into your own super fund, where it is taxed at 15 per cent rather than your marginal rate, and it helps pay down a loan on an asset you own.
In short, a permanent business expense becomes a contribution toward your retirement.
Why this is legal when residential is not
Super law generally prohibits a fund from acquiring assets from members or leasing assets to them. Business real property is the principal exception.
Under section 66 of the Superannuation Industry (Supervision) Act, business real property broadly means land and buildings used wholly and exclusively in one or more businesses. Where a property meets that test, an SMSF can do two things it cannot do with residential property:
- Acquire it from a related party. If you already own your business premises personally or through a trust, your SMSF may be able to buy it from you, subject to proper valuation and advice on the stamp duty and capital gains consequences.
- Lease it back to a related party. Your own business can be the tenant, provided the lease is on genuine arm’s length terms.
Neither is permitted for residential property, at any price, which is why a member can never live in or rent a home owned by their SMSF. That distinction is also why the August 2026 borrowing ban leaves commercial arrangements untouched.
How the structure works
The limited recourse borrowing arrangement
Because super funds are generally not permitted to borrow, the loan is made under a limited recourse borrowing arrangement, or LRBA. The limited recourse feature means that if the loan defaults, the lender can only recover against that single property. The rest of your fund is quarantined and protected.
The bare trust
The property is held by a separate holding trust, often called a bare trust, while the loan is being repaid. Your SMSF is the beneficial owner throughout, receiving all the rent and any capital growth. When the loan is repaid, title transfers to the fund. The bare trust must be correctly established before contracts are exchanged. Getting the sequencing wrong is one of the most expensive mistakes in this area, and it is not easily fixed after the fact.
The lease
A written, enforceable lease between the fund and your business is not optional. It is the central compliance document, and it is the first thing an auditor will ask for. More on what it must contain below.
The rules you cannot bend
This strategy is well established and entirely legitimate. It is also closely audited, and the consequences of getting it wrong are severe. Three requirements matter most.
Market rent, documented
The rent your business pays must reflect what an unrelated tenant would pay for comparable premises in the same area. Charging yourself a discounted rent deprives the fund of income it should be earning, and the ATO treats it seriously.
If rent is set below market, the rental income can be classified as non-arm’s length income, or NALI, and taxed at 45 per cent instead of the concessional 15 per cent. Importantly, NALI applies to the entire rental income, not merely the shortfall. An independent rental appraisal at the outset, and at each rent review, is the practical protection against this.
The property must be used wholly and exclusively in a business
The business use test is applied when the property is acquired from a related party, and again whenever a related party leases it. Standard commercial premises such as offices, warehouses, factories, retail shops and medical suites generally qualify comfortably. Mixed-use property with a residential component is where this becomes complicated, and it needs specific advice.
Everything on arm’s length terms
The lease should be signed and dated by both parties, specify a clear rent review mechanism, define who is responsible for outgoings and insurance, and be complied with in practice. Rent must actually be paid, on time, at the frequency the lease specifies. A lease that exists on paper but is not followed is worse than no lease at all, because it demonstrates awareness of the obligation and a failure to meet it.
What it costs and what lenders require
SMSF commercial lending sits with a smaller group of specialist and non-bank lenders, since most major banks have stepped back from this market. As a general guide for 2026:
- Loan to value ratio. Typically 60 to 70 per cent, meaning a deposit of around 30 to 40 per cent of the purchase price.
- Interest rates. Broadly in the mid six to mid seven per cent range, above standard commercial pricing to reflect the limited recourse structure.
- Fund balance. Most lenders prefer to see a fund balance of around $400,000 to $500,000 or more before this becomes practical, once the deposit, acquisition costs and a liquidity buffer are accounted for.
- Liquidity buffer. Lenders want cash left in the fund after settlement, so repayments, insurance, rates and the annual audit can be met even if the property is temporarily vacant.
Beyond the loan, budget for the bare trust establishment, legal advice, an independent valuation, stamp duty and ongoing fund administration. These are real costs and they should be modelled before you commit, not discovered afterwards.
Who this suits
In my experience the strategy works best for:
- Established business owners who currently pay material rent and expect to occupy their premises for the long term.
- Business owners with a super balance large enough to fund the deposit and still leave a comfortable buffer in the fund.
- Owners roughly a decade or more from preservation age, giving the asset time to grow and the loan time to reduce.
- Anyone already looking at buying their premises personally, who has not yet compared that against holding it inside super.
It suits others less well. If your fund balance is modest, if the purchase would leave the fund heavily concentrated in a single geared asset, if your business occupies the premises only briefly, or if you may need to sell at short notice, the strategy carries real risk. Concentration risk inside a super fund is a legitimate concern, and it is worth being honest with yourself about it before proceeding.
A note on timing
There is no deadline on this strategy. Unlike the residential borrowing window that closes on 10 August 2026, commercial and business real property LRBAs are unaffected and continue indefinitely.
That said, the residential ban is likely to push more attention and more capital toward commercial SMSF lending over the coming year. Lender appetite and pricing in this segment are worth watching, and if buying your premises has been a someday idea, there is a reasonable argument for having the conversation sooner rather than later.
Frequently asked questions
Can my SMSF still borrow to buy commercial property after 10 August 2026? Yes. The ban applies to residential investment property only. Commercial and business real property LRBAs are unaffected.
Can my SMSF buy the premises I already own personally? Potentially, yes. Business real property is the main exception allowing an SMSF to acquire an asset from a related party. It must be at market value, and you need advice on the stamp duty and capital gains tax consequences before proceeding.
What happens if I charge my business below market rent? The rental income can be treated as non-arm’s length income and taxed at 45 per cent rather than 15 per cent, and it applies to the whole of the rent, not just the discount. An independent rental appraisal protects against this.
How much super do I need? As a general guide, most lenders prefer a balance of around $400,000 to $500,000 or more, given deposits of 30 to 40 per cent plus costs and a liquidity buffer. The right figure depends on the property and the lender.
Can I use this for a home office? No. The property must be used wholly and exclusively in a business. A residential property with a home office does not meet the business real property test.
Where to from here
Buying your business premises through your super is one of the most effective structures available to self-employed Australians, and it is one of the few property strategies inside super that the 2026 changes left completely intact. It is also unforgiving of poor execution. The bare trust must be in place before contracts, the lease must be genuinely commercial, and the numbers need to work with a proper buffer.
SMSF lending is the work I enjoy most, and my background across bank-side commercial credit and aggregator-level training on SMSF and commercial products means I can tell you quickly whether this stacks up for your situation, what the current lender panel will accept, and how to sequence it properly.
To find out whether buying your business premises through your SMSF could work for you, get in touch with UniFi Capital.
