Yes. Your self managed super fund can buy the commercial premises your business trades from, because business real property is a specific exception to the rules that normally stop a fund acquiring assets from its members. The fund then leases the property back to your business at market rent, so the rent you already pay builds wealth inside super instead of enriching a landlord.

For many established business owners, the single biggest lever they never pull is owning their own premises through their SMSF. You already write a rent cheque every month. The question worth asking is who that money should be building wealth for. In our experience working with Melbourne business owners, buying the premises through an SMSF is one of the most powerful long term structuring moves available, and also one of the easiest to get wrong. Mina Baselyous, a Chartered Tax Advisor (CTA), CPA and Registered Tax Agent, has structured these arrangements for trading businesses across a range of industries. This guide explains how the business real property strategy works, the rules that make or break it, and when it is genuinely worth doing.

What is business real property?

Business real property is land and buildings used wholly and exclusively in one or more businesses. It is the one asset class an SMSF is allowed to buy from a related party, including from you or your own company, and lease back to your business. Ordinary residential property cannot be acquired this way, and a property with mixed personal use usually fails the test.

The exception sits in section 66 of the Superannuation Industry (Supervision) Act 1993. It matters because two rules would otherwise block the deal: the ban on acquiring assets from related parties, and the in-house asset rule. A factory, warehouse, office, shop, medical suite or workshop used in your trading business will generally qualify as business real property, provided the use is genuinely business use. A farm can also qualify even where a modest home sits on the land. Read the ATO guidance on restrictions on SMSF investments before you assume a property qualifies.

Why buy your business premises through your SMSF?

The core benefit is that rent leaves your business as a deductible expense and lands inside a superannuation fund, where investment earnings are taxed at just 15 percent and can fall to zero in retirement pension phase. You convert an ongoing cost into a wealth building asset you control, held in the most tax effective structure available to Australians.

The SMSF sector is large and growing: as at the March 2026 quarter there were 672,805 SMSFs holding around $1.06 trillion in assets, according to the ATO SMSF quarterly statistical report. A meaningful slice of that is business real property held by owners doing exactly this. The advantages we see clients value most are:

• Asset protection. The premises sit inside super, quarantined from most trading risk if the business ever strikes trouble.
• Rent stays in the family. Your business pays market rent to your fund, not to an external landlord, so the money compounds toward your retirement.
• Concessional tax on earnings. Net rent is taxed at 15 percent inside the fund, well below most business owners’ marginal rates.
• Capital gains treatment. If the property is sold after 12 months the gain is taxed at an effective 10 percent in accumulation phase, and potentially zero if sold while the fund is fully in pension phase.
• Security of tenure. You are no longer at the mercy of a landlord deciding not to renew your lease.

The rules you cannot ignore

The strategy only works if the arrangement is run strictly at arm’s length. The lease must be on genuine commercial terms, the rent must be at market rate, and it must actually be paid on time, every time. Get this wrong and the ATO can tax the income as non-arm’s length income at 45 percent, which destroys the whole benefit.

Three rules do the heavy lifting. First, the in-house asset rule limits most related party investments to 5 percent of the fund, but business real property leased to your business is specifically excluded from that cap, which is what makes the strategy possible. Second, the lease must be documented and the rent set by reference to comparable market evidence, not a number that suits your cash flow. Third, any income that is not on arm’s length terms is taxed as non-arm’s length income at the top rate. As Mina Baselyous (CPA, CTA) puts it, the mistake we see most is treating the rent as flexible: inside an SMSF, a discounted or unpaid rent is not a favour to your business, it is a compliance breach.

How to fund the purchase: cash or an LRBA

If the fund has enough to buy outright, the purchase is straightforward. If it does not, the fund can borrow using a limited recourse borrowing arrangement, where the property is held in a separate holding trust until the loan is repaid. The lender’s recourse is limited to the property itself, protecting the rest of the fund’s assets.

An LRBA lets a fund with a solid balance and steady contributions acquire premises worth more than its current cash. The mechanics of the holding trust matter and are easy to get wrong, so we have written a separate guide on how the SMSF bare trust and LRBA structure works. A common approach is for members to pool their super into one fund, then use concessional and non concessional contributions to service the loan and build the balance over time. If you have not established a fund yet, start with our guide on how to set up an SMSF in Australia.

The tax angle: rent, deductions and selling the property

The tax outcomes are what make owners lean in. The rent your business pays is a deductible business expense, exactly as it would be to any landlord. Inside the fund that same rent is taxed at only 15 percent, and the eventual capital gain is concessionally taxed, or tax free if the property is sold in pension phase. The result is a legitimate, ATO sanctioned way to shift wealth into the lowest tax environment available.

This is where the strategy connects to the rest of your plan. The premises become a retirement asset that is separate from your trading entity, which supports both asset protection and succession. It also interacts with your broader business structure and, when you eventually exit, with the small business capital gains tax concessions on the business itself. Coordinating the fund, the trading entity and your personal position is exactly the kind of forward planning a Virtual CFO engagement is built around, and where proactive tax planning earns its keep.

Is this strategy right for your business?

The strategy suits established owners with a reasonable super balance, a stable business that will occupy the premises for years, and a genuine intention to hold long term. It is less suitable if your super balance is small, your occupancy needs are uncertain, or you may need the capital back quickly, because super is preserved and cannot simply be withdrawn.

In practice the decision turns on your numbers: the value of the premises, your combined super balances, your business cash flow and how close you are to retirement. It is not a do it yourself exercise. The lease, the valuation, any borrowing and the fund’s investment strategy all have to be right, and the cost of an error is measured in tens of thousands of dollars of unnecessary tax. This is a conversation to have before you sign a contract of sale, not after.

GST and the going concern exemption when your SMSF buys

If your fund is buying a commercial property that is already tenanted, the sale may qualify to be GST free as a supply of a going concern, which avoids having to fund an extra 10 percent at settlement. There is a catch that trips funds up: to claim the concession the fund must be registered, or required to be registered, for GST. A going-concern clause in the contract does not help if the fund is not registered, so the seller then has to charge GST.

A fund leasing commercial property is carrying on a leasing enterprise, so it must register for GST once the rent reaches the $75,000 threshold, and can register voluntarily below it, in the name of the fund itself rather than the corporate trustee. Get this in place before settlement. Our full explainer on the GST going concern exemption and margin scheme on commercial property walks through the conditions in detail.

Frequently Asked Questions

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