Commercial property is the last geared property play left inside super — and for the right trustee, it’s a genuinely powerful strategy. Here’s the plain-English starter pack: who it suits, why people do it, the honest trade-offs, the steps involved, and what it actually costs.
Is commercial property in SMSF right for you?
This strategy tends to be a strong fit if:
- ✅ Your SMSF (or your + your partner’s combined super) has roughly $200,000+ to work with.
- ✅ You’re comfortable leaving the money in super until retirement (you can’t pull it out early).
- ✅ You want a tangible asset you understand, not just a share portfolio.
- ✅ You’re happy to keep a cash buffer in the fund and follow the rules each year.
- ➕ Bonus: you run a business and currently pay rent for your premises (or plan to).
Why people do it — the advantages
- Pay rent to yourself, not a landlord. If your business leases the premises from your SMSF, the rent your business pays (a tax deduction for the business) lands in your super fund instead of someone else’s pocket. You’re effectively buying your own building while you work in it.
- A genuinely low-tax environment.
- Rental income inside the fund is taxed at 15% (versus up to 47% personally).
- Capital gains after 12 months are effectively taxed at 10%.
- Once you’re retired and the fund is in “pension phase,” rent and capital gains can be taxed at 0%.
- Leverage your super into a bigger asset. Rather than waiting years to save the full price, the fund borrows the balance — letting your super control a more valuable asset sooner, with the growth compounding inside super.
- Strong asset protection. These loans are “limited recourse.” In plain terms: if things ever went wrong, the lender can only claim the property itself — the rest of your super is quarantined and protected.
- Your business and your retirement pull in the same direction. Your rent payments build your nest egg. Your premises are secure (you’re the landlord). And when you eventually sell the business, you can keep the building and the rental income.
- Commercial yields are often higher. Commercial property commonly yields 6–8%, and tenants typically pay the outgoings (rates, insurance, maintenance) — which can make the fund’s cash flow cleaner than residential.
The honest trade-offs — so there are no surprises
Client satisfaction comes from knowing what you’re signing up for. Here’s the straight version:
- You’ll need a bigger deposit. Lenders lend 65–80% for commercial (vs up to 80–90% elsewhere), so plan for a 25–35% deposit plus costs out of the fund.
- The money is locked in super. You generally can’t access it until retirement. This is a long-term play.
- You need a cash buffer. Lenders (and good sense) want 10–15% of the loan kept in the fund as a liquidity reserve — to cover repayments, costs and any vacancy.
- There are extra costs and admin. Setup is higher than a normal purchase, and the fund has annual audit, accounting and (for commercial) GST obligations.
- The rules must be followed. Especially if you lease to your own business — the rent has to be at genuine market rate, with a proper written lease. Get it wrong and the tax office can tax the income at 45%. This is exactly why you use a team who do this all day (us, plus your accountant and solicitor).
- Vacancy hits harder. Commercial properties can take longer to re-let, and the fund still has to meet its costs. The buffer is your safety net.
The steps — what the journey actually looks like
We coordinate the whole thing. Your part is mostly decisions and signatures.
- Free strategy chat. We check it’s genuinely right for you, your fund and your goals — and that the numbers stack up before you spend anything.
- Get the fund ready. Confirm (or set up) your SMSF with a company trustee, and make sure the fund’s rules and investment strategy allow the purchase. (Your accountant leads this; we coordinate.)
- Set up the holding structure. A “bare trust” is established to hold the property while the loan is being repaid. Timing matters — in some states this must be in place before you sign the contract, or you risk paying stamp duty twice. We make sure the order is right.
- Sort the finance. We match you to the right lender, confirm how much the fund can borrow, get you approved, and arrange the valuation.
- Get the property and lease right. Confirm the property qualifies; if you’re leasing to your own business, we make sure there’s a proper market-rent lease in place (backed by an independent rent appraisal).
- Settle. The property is purchased and held in the bare trust; the loan settles.
- Run it well. Each year the fund lodges its return, gets audited, handles GST, and (if leasing to you) keeps the lease current. We review your loan periodically to keep your rate sharp.
How long does it take?
Allow roughly 4–8 weeks from go-ahead to settlement — a bit longer than a normal home loan, because of the trust setup, fund checks and the specialist nature of the lending. Setting the fund up from scratch adds time at the front, so the earlier we start, the smoother it runs.
The fees you can expect
Every fund and deal is different, but here’s a realistic picture so nothing catches you out. These costs are paid by the fund, not you personally.
One-off, upfront
| Item | Typical range |
|---|---|
| SMSF setup (if you don’t have one yet) | $1,000 – $3,000 |
| Bare trust + corporate trustee structure | $1,500 – $3,000 |
| Loan application / lender legal / valuation | $2,000 – $5,000 |
| Conveyancing / legal | $1,500 – $3,000 |
| Stamp duty | State-based, on the price (often the largest single cost) |
| Indicative total (excl. stamp duty & deposit) | ~$15,000 – $30,000 |
Ongoing, each year
| Item | Typical range |
|---|---|
| Fund audit | $800 – $2,500 |
| Accounting & tax return | $2,000 – $3,000 |
| GST / BAS administration (commercial) | included or modest add-on |
| Annual property valuation (if lender requires) | $500 – $1,500 |
| Indicative total | ~$3,300 – $7,000 per year (before loan repayments) |
These costs are real and need to be covered even during a vacancy — which is why the strategy works best at a sensible fund balance and with a buffer in place.
A note on interest rates
Commercial SMSF loans carry a premium over standard loans (because the lender’s security is narrower) — currently roughly 0.5–1.5% higher than residential loans depending on the property, tenant strength and your fund. Metropolitan properties with solid tenants and a healthy fund balance get the sharper rates. We shop the specialist lenders to land you the best fit.
Where to start
Book a free, no-obligation strategy chat and we’ll tell you honestly whether SMSF commercial property fits your fund and your goals — before you spend a cent. Get in touch with James Zhang at Assembly Finance.
