🏢 How Can You Buy Commercial Property Using SMSF?

September 02, 2025

🏢 How Can You Buy Commercial Property Using SMSF?

Investing in commercial property through your Self-Managed Super Fund (SMSF) is one of the most tax-efficient ways to grow your wealth—especially if you're a business owner looking to secure your future. With the right structure and advice, it’s possible to buy a commercial property, pay rent to yourself, and build long-term returns for retirement.

Here’s how it works and what you need to consider.

✅ Why Buy Commercial Property with an SMSF?

1. No Landlord – You Pay Rent to Yourself

When your SMSF owns your business premises, your rent goes into your super fund—not someone else’s pocket. It’s a clever way to turn an expense into a retirement-building asset. Rent paid to your SMSF is taxed at just 15%, while leasing expenses remain deductible—usually capped at 46.5%.

2. Tax Benefits

Hold the property for over 12 months? You’ll only pay 10% capital gains tax on the sale.
Sell during pension phase? You pay zero capital gains tax.
Rental income is taxed at a concessional rate (15% accumulation phase, 0% pension phase).

🧾 What’s the Process?

Valuation
The commercial property must be independently valued and purchased at market value.
Compliance
The lease must be commercial in nature and on arm’s-length terms—including full market rent and timely payments.
Usage Rules
The property must be used solely for business purposes and should not be mixed with residential use.
Ongoing Requirements
The SMSF must regularly review the property's value and ensure it continues to benefit all fund members.

⚠️ What Are the Risks?

Liquidity Risk
Commercial property is illiquid. If your SMSF needs cash, it may be hard to sell quickly.
Concentration Risk
If your fund is too heavily invested in one asset, it could jeopardise your retirement goals.
Maintenance & Costs
All upkeep, insurance, and legal costs are your responsibility—not the tenant’s.
Tenant Risk
If your business struggles to pay rent or closes, the SMSF still requires full rental payments.

📌 Is It Right for You?

Buying a commercial property using SMSF can be a strategic move, especially if you're self-employed and want to control your own business premises. But it’s not a one-size-fits-all solution. Always seek independent financial, legal, and tax advice before making a decision.

🧠 Pro Tip:

If you’re based in Sydney’s inner city—Surry Hills, Darlinghurst, Potts Point, or Redfern—and want to explore SMSF-friendly commercial properties, Space Property Agency can help you find and structure the right investment.

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Conrad Vass - Space Property Agency