Buying the commercial premises your business operates from through your SMSF is one of the most powerful wealth-building strategies available to Australian small business owners, professionals and tradespeople in 2026. It is fully legal, increasingly popular since the residential borrowing ban, and offers a unique combination of tax advantages that no other investment structure can match.
How It Works — The Business Real Property Exemption
Under the SIS Act, an SMSF is normally prohibited from acquiring assets from related parties. However, the business real property exemption creates a specific carve-out: an SMSF can acquire business real property from a related party, and can lease business real property to a related party, provided two conditions are met:
- The property is used wholly and exclusively in a business
- The lease is at market rent on arm’s length commercial terms
Step-by-Step: How to Buy Your Business Premises Through Your SMSF
- Check your fund balance. You need sufficient cash for a deposit (30–40% of purchase price) plus stamp duty, legal costs and establishment fees. Most SMSF lenders require a minimum fund balance of $200,000–$300,000.
- Confirm the property qualifies. The premises must be used wholly and exclusively in carrying on a business. Mixed residential/commercial properties do not qualify unless the commercial portion is acquired separately.
- Obtain SMSF finance pre-approval. SMSF commercial property loans are available from specialist lenders at LVRs of 60–70%.
- Establish a bare trust. The property is held in a bare trust during the loan period. Your SMSF must engage a specialist SMSF solicitor to establish this structure.
- Execute an arm’s length lease. Your business must enter a formal lease with your SMSF at market rent, with standard commercial lease terms.
- Settlement and ongoing management. Your business pays rent monthly. Your SMSF holds the asset, receives the income, and benefits from any capital growth.
The Tax Benefits
| Tax Event | Outside SMSF | Inside SMSF (accumulation) | Inside SMSF (pension phase) |
|---|---|---|---|
| Rental income | Up to 47% marginal rate | 15% | 0% |
| Capital gain (12+ months) | Up to 23.5% (after 50% discount) | 10% | 0% |
| Depreciation | Claimed by business | Reduces SMSF taxable income | Reduces SMSF taxable income |
Is This Strategy Available in 2026 After the Borrowing Ban?
Yes. The proposed ban on new SMSF LRBAs applies only to residential property. The business real property exemption and SMSF commercial borrowing remain fully intact. This strategy is more relevant than ever in 2026 as SMSF investors redirect capital from residential to commercial assets.
Whether you’re buying your first investment property, building a portfolio, or exploring SMSF property investment, the Collings Property Platform gives you access to off-market opportunities, portfolio tracking, investment tools, and property insights powered by GeeVee AI. Join free today and start building your property future. collings.com.au/portal
Frequently Asked Questions
Can my SMSF buy the shop, office or warehouse my business uses?
Yes, under the business real property exemption, provided the lease is at market rent on arm’s length terms.
Can my SMSF buy business premises from me personally?
Yes. The business real property exemption allows related party acquisitions of business real property, unlike most other SMSF asset acquisitions.
Does the residential borrowing ban affect business premises purchases through an SMSF?
No. The ban applies only to residential property. Commercial business premises purchases via SMSF LRBA are fully available in 2026.
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