“Can I still buy property through my super?” We’ve had that question a lot lately, with residential borrowing inside SMSFs now banned. The honest answer is yes — just not the way most people assume. Commercial property, geared through a Limited Recourse Borrowing Arrangement (LRBA), is completely untouched by the new rules, and for the right trustee it was already the stronger structure.
Why commercial is different from residential in super
From 10 August 2026, SMSFs can no longer take out new loans to buy residential property. That change doesn’t touch commercial, industrial or retail property at all — a fund can still borrow via an LRBA to buy an office, warehouse, shop, factory or medical suite exactly as it could before. The legislation draws its line at residential versus non-residential, not “property in super” as a whole category — a distinction that’s getting lost in a lot of the general commentary.
The case for commercial property in an SMSF
Independent of the borrowing ban, commercial property has structural advantages inside super that residential doesn’t:
- Higher net yields. Commercial property commonly returns gross yields in the 6–8% range, well above typical residential yields.
- Tenants usually cover the outgoings. Most commercial leases are net or semi-net, with the tenant paying council rates, land tax, insurance and maintenance — rather than the landlord absorbing them as with most residential tenancies.
- Longer, more stable leases. Commercial leases typically run 3–10 years with fixed annual increases, versus 6–12 month residential tenancies — less vacancy risk for a fund that needs to keep paying its own bills.
- Concessional tax on rent and gains. Rental income is taxed at 15% in accumulation phase — or 0% once the fund is fully in retirement (pension) phase — the same concessional treatment as any SMSF asset.
Buying your own business premises
This is the feature that makes commercial SMSF property genuinely different from any other property investment: a fund can buy real property from a related party — including your own business — if it qualifies as business real property (land and buildings used wholly and exclusively in a business). That’s a specific carve-out from the usual rule banning SMSFs from acquiring assets off related parties.
In practice, this lets a business owner sell their own commercial premises into their SMSF (or have the SMSF buy it new), then have the operating business pay market-rate rent back to the fund. The rent has to be on strict arm’s length terms — a written lease, an independent market rent valuation, no favourable treatment — but done properly, you’re paying rent to your own retirement savings instead of to a landlord. Holding the premises inside the SMSF, separate from the operating entity, also ring-fences that property from the risks of the trading business itself.
How big is this, actually?
This isn’t a fringe strategy. ATO data to December 2025 puts non-residential (commercial) property holdings across the SMSF sector at $116.7 billion — around 11% of the sector’s $1.06 trillion in total assets, and one of the largest single asset categories SMSFs hold.
Why most brokers — and big banks — avoid it
Despite the size of the space, most of the major banks scaled back or exited SMSF LRBA lending years ago, and most mortgage brokers never built the expertise to structure it. Commercial SMSF lending sits at the intersection of super law, trust structuring and commercial lending — three specialities most residential-focused brokers don’t combine. That’s exactly why it flies under the radar for so many business owners who’d otherwise be a great fit.
The catches to understand before you start
- It’s a specialist lending pool. Fewer lenders write commercial SMSF LRBAs than standard investment loans, typically with lower LVRs (often 60–70%) and stricter servicing tests run at the fund level, not your personal income.
- Related-party leases must be watertight. Below-market rent, an informal lease, or missing valuation evidence can breach the sole-purpose test and trigger serious ATO penalties for the fund.
- Your fund needs the balance and contribution capacity to service the loan — LRBA lending is serviced from fund income (rent) and contributions, not your personal salary.
- Set-up costs are real. A bare trust structure, SMSF-specific legal documents and specialist advice all add cost relative to a standard property purchase.
Where to start
If commercial property in your SMSF is worth exploring, the first useful step is establishing whether your fund’s balance, contribution pattern and (if relevant) your business’s rent capacity can actually service an LRBA — before you get attached to a specific property or premises.
This is general information only, not personal advice. Whether an SMSF LRBA suits your fund depends on your balance, your business circumstances and your risk tolerance — talk it through with your SMSF accountant or financial adviser alongside your broker.
We structure commercial SMSF lending regularly, including for business owners buying their own premises. Contact James for a free SMSF lending consultation.
