Can I Buy a Commercial Property Through My SMSF?
Subject to the rules and to proper advice, yes. And since 10 August 2026, business real property is close to the only property a fund can still borrow to buy, because the law changed in the middle of this year and a great deal of what is published about this has not caught up.
The short answer
Subject to the rules and to proper advice, yes. Commercial premises used in a business can generally be acquired by a self-managed super fund, and where the fund borrows it does so through a limited recourse borrowing arrangement. This matters more than usual now. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, a limited recourse borrowing arrangement entered into on or after 10 August 2026 can only be used to acquire real property that is business real property. Existing arrangements, and the refinancing of them, are not affected. Whether any of this suits your circumstances is a question for a licensed financial adviser and an SMSF specialist, not for a finance broker or a webpage.
What changed, and when
If you researched this topic before the middle of this year, some of what you read is now out of date, and it went out of date recently enough that plenty of published material still has not caught up.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. The relevant provisions commence 45 days after assent, which lands on 10 August 2026. Its effect on this subject, as the ATO describes it, is that a limited recourse borrowing arrangement entered into on or after that date to purchase real property can only be used to acquire business real property.
The ATO is careful about one point and it is worth repeating. Limited recourse borrowing arrangements are not banned. A fund can still borrow, and still maintain a borrowing, under an LRBA. What changed is that the real property it may acquire under a new arrangement is restricted to business real property.
In plain terms. Borrowing inside super to buy a residential investment property is, for new arrangements, no longer available. Borrowing inside super to buy business real property remains available. Commercial premises used in a business are the category that survives.
So the question in the title of this page has quietly become more consequential than it was in June. Not because commercial property changed, but because the alternative disappeared. If you are weighing geared residential property, the route is now outside super entirely, which is the territory covered on our investment loans page rather than here.
Check the date on anything you read about SMSF property, including material from advisers and lenders. The landscape moved in the middle of this year and a lot of confident writing predates it.
The date that decides it is not settlement
This is the point most likely to matter to someone actually mid-transaction, and it is the one most often stated loosely.
The restriction bites on arrangements entered into on or after 10 August 2026. For an ordinary property purchase, the event that decides it is the exchange of contracts. Not the settlement date. Not the date the loan documents are signed. Not the date the fund was established.
The ATO confirms the change does not affect binding contracts to acquire real property that were exchanged before commencement, even where the arrangement completes afterwards. A fund that exchanged in early August and settles in October is assessed on the earlier date.
Two consequences follow. If you are mid-transaction and unsure which side of the line you fall on, the question to put to your SMSF specialist is precisely when the fund entered into the arrangement, evidenced by the contract. And if anyone tells you a deal is dead because settlement is after 10 August, check that against the ATO’s own statement of scope before you act on it.
What business real property actually means
Everything now turns on this definition, which makes it worth understanding properly rather than assuming.
The ATO describes business real property as generally meaning land and buildings used wholly and exclusively in one or more businesses. Where a dwelling is involved, it can still qualify where any dwelling used for private or domestic purposes sits on an area of land no more than two hectares.
The phrase doing the work is wholly and exclusively. It is stricter than most people assume, and it is where the practical difficulty lives.
- A warehouse, factory unit, office suite, consulting rooms or a shop operated as a business will commonly satisfy it.
- Mixed use premises are where it gets complicated, because part-private or part-residential use can be fatal to the test depending on the facts. A shop with a flat above it is the classic example.
- Vacant land, property held for future development, and property used partly for private purposes each raise questions needing specific assessment.
Do not assume a property qualifies because it looks commercial. Whether a specific property meets the definition is a technical question turning on how the land and buildings are actually used, not on the zoning or the name on the door. Have an SMSF specialist confirm it in writing before contracts rather than after. A property that fails the test is a property the fund cannot borrow to acquire.
The two exceptions the whole strategy rests on
Here is why business owners use this at all, and it is not primarily about the property. It is about two rules that business real property is specifically excepted from.
Exception one: acquiring from a related party
The general rule is that an SMSF cannot acquire an asset from a related party. The ATO states a fund cannot do so unless the price reflects market value and the asset meets specific criteria, and it lists business real property among those exceptions.
That single carve-out is the reason a business owner can, in principle, have their fund acquire the premises their own business already occupies. You cannot do this with a residential property you own. You may be able to do it with genuine business real property, at market value.
Exception two: the in-house asset rule
A fund is restricted from holding in-house assets worth more than five per cent of the market value of its total assets, and the ATO notes that an asset leased to a related party is generally an in-house asset. On its face that would make leasing a fund-owned property to your own business almost impossible at any meaningful scale.
Business real property leased between a fund and a related party is listed by the ATO as an exception to those in-house asset restrictions. Which is what allows the arrangement people actually want: the fund owns the premises, the business occupies them, and the rent flows from the business into the fund.
Two exceptions, both attaching to the same definition. That is the entire architecture, and it is why “is this business real property?” is not a technicality but the whole question.
What the rules demand in return
Exceptions come with conditions, and these are the ones funds most often fall down on. None are optional and none are satisfied by intention.
| Requirement | What it means in practice |
|---|---|
| Market value acquisition | Where the fund acquires from a related party, the ATO requires the price to reflect market value. A valuation is not a formality, and a favourable price to your own fund is not a benefit, it is a problem. |
| Arm’s length lease | Any lease must be made on an arm’s length basis and reflect market value. Your business pays your fund genuine market rent, documented and actually paid, on time, every time. |
| Sole purpose test | The fund must be maintained for the sole purpose of providing retirement benefits to members. Arrangements delivering a present-day benefit to you or your business are where this test bites. |
| Documentation that matches reality | A lease that exists on paper but is not observed in practice is worse than no lease. Rent skipped in a hard quarter is the kind of informality that creates compliance problems later. |
The pattern is consistent. The concession is that you may transact with your own fund, and the price of the concession is that you must do so as though you were strangers. Business owners used to running things by agreement and sorting the paperwork later find this the hardest part, and it is not an area where good intentions count for much.
How the borrowing itself works
If the fund has the cash, it buys the property and there is no borrowing question. Most do not, which is where the limited recourse borrowing arrangement comes in.
An LRBA is the structure through which an SMSF is permitted to borrow. The asset sits in a separate holding trust rather than directly in the fund, and the lender’s recourse is limited to that asset rather than extending to the fund’s other assets. That limitation is the protective feature the structure exists to provide, and it has been the only lawful route for an SMSF to borrow to buy property since 2007.
Practically, several things are worth knowing before you start. It requires specific legal documentation, which is a solicitor’s work rather than a template exercise. There are strict rules about what may be done to the asset while the borrowing is in place, which affects renovation and development plans. Lender appetite for SMSF lending is materially narrower than for ordinary commercial lending, and terms differ.
It is not a commercial loan with a different label, and treating it as one is how transactions get expensive. Our SMSF loans page covers the lending side. If the property is being bought outside super instead, the equivalent sits on our commercial property loan page, and the wider range of facilities a business might use alongside it is on the commercial loans page.
Already have the advice and need the lending side?
If your adviser and SMSF specialist have confirmed the strategy and that the property qualifies, book a free 15-minute call and we will walk through what lending is available, which lenders participate, and what the structure requires. If you have not had that advice yet, we will tell you to get it first.
What is not changing, and one trap for existing holders
Worth stating plainly, because coverage of this change has generated a good deal of confusion.
- Existing arrangements are not affected. An LRBA entered into before 10 August 2026 continues under the existing rules. There is no forced sale, no loan to value reset, and no compliance issue arising from these reforms alone.
- Refinancing an existing arrangement remains available. The ATO states the change does not affect the refinancing of arrangements existing before commencement.
- Business real property remains acquirable. The restriction narrows the real property that may be acquired to business real property. It does not remove it.
- Buying without borrowing is a different question. The restriction is about what can be acquired under a limited recourse borrowing arrangement. A fund purchasing residential property outright, without borrowing, is governed by the general investment rules rather than by this amendment.
The trap in the word refinancing
Refinancing an existing residential LRBA is permitted, but on substantially the same terms. Where a refinance involves a top-up, an equity release, or a change to the underlying security, it may be treated as a new arrangement and therefore fall inside the restriction.
That distinction matters commercially. An existing holder who assumes a refinance is a refinance, and asks for extra funds while they are at it, can convert a protected arrangement into a prohibited one. If you hold a residential LRBA and are considering any change to it, have the structure of the transaction confirmed by your SMSF specialist before it is documented, not after.
Why a deadline is a bad reason to hurry
There is a version of this article that would push you toward a decision on a clock. We are not going to write it, and it is worth explaining why.
First, the deadline has passed and it never applied to what this page is about. Business real property remains acquirable. If you are considering commercial premises, the change does not close a door on you at all.
Second, and more importantly, the speed at which a decision must be made is not a good input into whether it is a sound decision. An SMSF property purchase involves the fund’s investment strategy, the sole purpose test, liquidity for pensions and expenses, diversification, insurance, the tax position, the lease, and the legal structure. Those questions take the time they take. If a strategy only works because it was executed in a hurry before a date, that is information about the strategy rather than about the date.
Third, concentration risk deserves a mention this kind of article usually skips. Having your fund own the building your business occupies means your retirement savings and your income are tied to the same enterprise and often the same premises. If the business struggles, the tenant struggles, and both sides of your position move together. That is not an argument against it. It is a question a licensed adviser should be helping you weigh, and it is not one a broker or a webpage is equipped to answer.
Who you actually need to speak to
This is the most professionally crowded transaction most business owners will ever do, and the order matters.
- A licensed financial adviser. On whether an SMSF, and this kind of investment within it, suits your circumstances at all. This comes first because it determines whether the rest is relevant. Intellect Finance holds a credit licence, not an Australian Financial Services Licence, and cannot answer it.
- An SMSF specialist or accountant. On the fund’s compliance, the investment strategy, the sole purpose test, the tax treatment, and critically on whether the specific property meets the business real property definition.
- A solicitor. On the contract, the holding trust documentation, and the lease between the fund and the business. The documentation on an LRBA is not a template exercise.
- A finance broker. On what lending is available, from which lenders, on what terms, and what the structure requires. This is our part and it is narrower than it is sometimes presented as.
If anyone offers to handle all four, be careful. These are separate licences and separate competencies, and the reason they are separate is that the conflicts between them are real.
What Intellect Finance does, and does not, do here
Our role is deliberately limited. Once your adviser and SMSF specialist have confirmed that the strategy is appropriate and the property qualifies, we can tell you what lending is available for an SMSF purchase, which lenders participate in this kind of transaction, what the structure and documentation require, and what the costs are.
What we will not do is tell you whether to buy a property inside your superannuation, whether an SMSF is right for you, or whether a particular property meets the business real property test. Those are not our calls to make and we are not licensed to make them. If you come to us before you have had that advice, we will say so and point you to it first, which is occasionally an unwelcome answer and always the correct one.
We charge you nothing for arranging the lending, on any loan type including SMSF and complex commercial transactions. The lender pays a commission on settlement, disclosed to you in writing in our Credit Guide before we provide any credit assistance. Note that this refers to our fee only. The fund will incur its own costs for legal documentation, advice, valuation and lender fees, and those are real and payable by the fund.
Australian Credit Licence 390611, members of the MFAA and AFCA. Penrith based since 2005, clients Australia-wide.
Read Intellect Finance’s Google reviews
SMSF property attracts more confident selling than almost any other topic in finance. Rather than adding to it, here are Intellect Finance’s Google reviews, live from our Google Business Profile and unedited.
These reviews reflect other clients’ experiences. They are not a promise of any particular outcome, and nothing in them should be read as a recommendation about superannuation strategy.
Frequently Asked
SMSF commercial property questions
General information about the rules. Not advice about your fund.
Can I buy a commercial property through my SMSF?
Subject to the rules and to advice, yes. Commercial premises used in a business can generally be acquired by a self-managed super fund, and where the fund needs to borrow, that borrowing is done through a limited recourse borrowing arrangement. This became more significant in 2026, because a new LRBA entered into on or after 10 August 2026 can only be used to acquire business real property. Whether it is appropriate for you is a question for a licensed financial adviser and an SMSF specialist.
What changed for SMSF borrowing on 10 August 2026?
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, with the relevant provisions commencing 45 days later on 10 August 2026. From that date, an LRBA used to acquire real property can only acquire business real property. The ATO states LRBAs are not banned, that existing arrangements are unaffected, and that refinancing of existing arrangements is unaffected.
Is the cut-off based on settlement or exchange of contracts?
The restriction applies to arrangements entered into on or after 10 August 2026. For an ordinary purchase that is the exchange of contracts, not settlement and not the date loan documents are signed. A binding contract exchanged before commencement is not affected even where the arrangement completes afterwards. If you are unsure which side of the line you are on, that is a question for your SMSF specialist.
What counts as business real property?
The ATO describes it as generally meaning land and buildings used wholly and exclusively in one or more businesses. Where a dwelling is present it can still qualify if any dwelling used for private or domestic purposes sits on an area of land no more than two hectares. The wholly and exclusively test is stricter than people expect, particularly for mixed use premises. Whether a specific property meets it should be confirmed by an SMSF specialist before anything is signed.
Can my SMSF buy the premises my own business operates from?
This is the reason the strategy exists. An SMSF generally cannot acquire an asset from a related party, but the ATO lists business real property as an exception, provided the acquisition price reflects market value. That is why a business owner can, in principle, have their fund acquire the premises their business occupies, which is not possible with a residential property. The market value requirement is not a formality and a valuation matters.
Can my SMSF lease the property back to my own business?
Business real property leased between a fund and a related party is listed by the ATO as an exception to the in-house asset restrictions, which otherwise limit a fund to holding no more than five per cent of its total assets in in-house assets. The condition is that the lease must be on an arm’s length basis and reflect market value. Your business must pay your fund genuine market rent, documented properly and actually paid. Informality here is where funds get into difficulty.
I have an existing residential LRBA. Can I still refinance it?
The ATO states the change does not affect the refinancing of arrangements existing before 10 August 2026. The caution is that this generally means refinancing on substantially the same terms. A refinance involving a top-up, an equity release, or a change to the underlying security may be treated as a new arrangement and therefore caught by the restriction. Have the structure confirmed by your SMSF specialist before it is documented.
Can my SMSF still buy residential property without borrowing?
The restriction applies to what can be acquired under a limited recourse borrowing arrangement. An unleveraged acquisition is governed by the general investment rules instead, including the fund’s investment strategy and diversification requirements, rather than by this amendment. Whether it is appropriate for your fund is a question for a licensed financial adviser.
What is a limited recourse borrowing arrangement?
It is the structure through which an SMSF is permitted to borrow. The asset is held in a separate holding trust and the lender’s recourse is limited to that asset rather than extending to the fund’s other assets, which is the protection the structure is designed to provide. It involves specific legal documentation and strict conditions, including rules about what can be done to the asset while the borrowing is in place. It is not a standard commercial loan with a different label.
Who do I actually need to speak to about this?
A licensed financial adviser, on whether an SMSF and this kind of investment suit your circumstances. An SMSF specialist or accountant, on fund compliance, the sole purpose test, and whether a specific property meets the business real property definition. A solicitor, on the contract, holding trust and lease. A finance broker can arrange the lending once those questions are settled. Intellect Finance holds a credit licence and cannot advise on whether an SMSF strategy is appropriate for you.
The honest bottom line
Yes, subject to the rules and to advice you have not received from this page. Commercial premises used in a business remain acquirable by a fund, and since 10 August 2026 they are close to the only property a new limited recourse borrowing arrangement can be used to buy.
The architecture is narrower than it looks. Two exceptions, both attaching to the definition of business real property, are what make the strategy possible: you may acquire it from a related party at market value, and you may lease it to a related party without falling foul of the in-house asset rule. Both concessions are conditional on behaving toward your own fund exactly as you would toward a stranger, in writing, consistently, for as long as you hold it.
And the closing note is a caution rather than a call to action. Do not accelerate a decision about your retirement savings because of a date, particularly one that has already passed and never restricted the thing you are reading about. Get the advice, in the right order, from people licensed to give it. The lending is the last question, not the first one.
Joseph Sukkar
Joe founded Intellect Finance in Penrith in 2005 and has more than 25 years in Australian finance. The firm arranges SMSF and commercial property lending regularly, and works alongside clients’ accountants, SMSF specialists and solicitors rather than in place of them. Intellect Finance holds a credit licence and is not licensed to provide financial or superannuation advice. More about the team.
Sources
Australian Taxation Office, Changes to limited recourse borrowing arrangements, for the commencement date, the restriction to business real property, and the treatment of existing arrangements and refinancing. ato.gov.au
Australian Taxation Office, SMSF investment restrictions, for acquisitions from related parties, the business real property exception, the in-house asset limit, the sole purpose test and arm’s length leasing. ato.gov.au
Australian Taxation Office, Self-Managed Superannuation Funds Ruling SMSFR 2012/1, on the application of key concepts to limited recourse borrowing arrangements. ato.gov.au
Mortgage & Finance Association of Australia, SMSF residential property borrowing ban now in effect: what mortgage and finance brokers need to know, August 2026. mfaa.com.au
Important disclosures, general advice warning and licensing
General information only, and not personal financial advice. This article is general information only and does not constitute financial, credit, legal, investment, superannuation or tax advice. It does not take your personal or financial circumstances into account, and it is not a recommendation to establish a self-managed super fund, to acquire any property, to enter into any borrowing arrangement, or to refrain from doing so.
SMSF investment involves complex legal, tax and compliance requirements. Speak with a licensed financial adviser and an SMSF specialist before making any decisions regarding your superannuation. Intellect Finance Pty Ltd holds an Australian Credit Licence, not an Australian Financial Services Licence. We are licensed to provide credit assistance. We are not licensed to advise on superannuation, on whether an SMSF is appropriate for you, on investment strategy, on asset allocation, or on whether a particular property is a suitable investment for your fund, and nothing on this page should be read as doing so.
We cannot determine whether a property meets the business real property definition. That is a technical question depending on the actual use of the land and buildings and must be confirmed by an SMSF specialist, accountant or solicitor in relation to the specific property, in writing, before you commit. The descriptions of that definition on this page are general summaries of published ATO guidance and are not a substitute for advice on your property.
About the legislative change. References to the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, its Royal Assent on 26 June 2026, commencement 45 days later on 10 August 2026, and its scope including that it applies to arrangements entered into on or after that date and does not affect arrangements existing before it or the refinancing of those arrangements, reflect the ATO’s published guidance as reviewed on 2 September 2026. The observation that a refinance involving a top-up, equity release or change of security may be treated as a new arrangement is a general caution and must be confirmed for your transaction. Legislation and guidance change. Confirm the current position with the ATO and with your advisers before acting.
About the SMSF rules described. Statements regarding acquisition of assets from related parties, the business real property exception, the five per cent in-house asset limit, the sole purpose test and arm’s length leasing are general summaries of ATO guidance. They are simplified for readability, are not a complete statement of the law, and do not address every requirement applying to a fund or a transaction.
Risks not covered. This page does not address, and is not a substitute for advice on, concentration risk, liquidity, diversification, insurance, the fund’s investment strategy, contribution caps, pension obligations, estate planning, the consequences of a member’s death or incapacity, or the tax treatment of any arrangement. These matter and require licensed advice.
Lender policies vary and change. SMSF lending is offered by a limited number of lenders on terms that differ from ordinary commercial lending and change without notice. No broker can guarantee finance approval, a particular structure, pricing, or a timeframe.
Other professionals. Superannuation strategy and investment suitability to a licensed financial adviser. Fund compliance, tax, the sole purpose test and the business real property question to an SMSF specialist or accountant. Contracts, holding trust documentation and leases to your solicitor. Property valuation to a qualified valuer.
What we charge you. Nothing, on any loan type, including SMSF and complex commercial lending. No arrangement fee and no clawback recovery fee. Lenders pay us a commission on settlement, disclosed to you in writing in our Credit Guide before we provide credit assistance. This describes our fee only. The fund will incur its own costs, including legal documentation, advice, valuation and lender fees, which are separate, real, and payable by the fund.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences, are not a promise of any particular outcome, and are not a recommendation regarding superannuation.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. Article checked 2 September 2026.
Next Reads
Related services and guides
The Lending Question, Last
Get the advice first. Then talk to us.
If your licensed adviser and SMSF specialist have confirmed the strategy and the property qualifies, book a free 15-minute call and we will walk through what lending is available, which lenders participate, and what the structure requires. If you have not had that advice yet, we will tell you to get it before anything else, because that is the order this works in. Penrith based since 2005, clients Australia-wide. ACL 390611, not an AFSL.
General information only, not financial, superannuation, legal or tax advice. SMSF investment involves complex legal, tax and compliance requirements. Speak with a licensed financial adviser and SMSF specialist before making any decisions regarding your superannuation. Intellect Finance holds a credit licence, not an AFSL.
Intellect Finance Pty Ltd | Australian Credit Licence 390611 | MFAA Member | AFCA Member