The Pros and Cons of Buying an Office With Your SMSF

If you run your own business, buying your office through your super can look like an obvious move. It can work, but it comes with firm rules, and a few trade-offs are worth knowing before you speak to a lender.

The short version is this. Your fund can borrow to buy a commercial property, and your business pays rent to the fund instead of to a landlord. In return, your retirement savings become tied to one building, and the loan has tight conditions.

Can You Buy a Commercial Property With Super?

Yes. A self-managed super fund can buy commercial property, and it can borrow to do it through a Limited Recourse Borrowing Arrangement (LRBA). Under an LRBA, the fund borrows to buy a single asset, which is held in a separate holding trust (often called an SMSF bare trust). The lender's recourse is limited to that asset.

The building can be your own business premises. It needs to meet the sole purpose test, which means the fund exists to provide retirement benefits. You also can't live in it, and the lease with your business must be on commercial terms. Our SMSF loans page covers the basics of how the structure fits together.

What Changed for SMSF Property Loans on 10 August 2026?

For an LRBA entered into on or after 10 August 2026, real property can only be financed if it is business real property. That generally means land and buildings used wholly and exclusively in one or more businesses.

This is good news for an office purchase, because a genuine business premises fits that definition. The ATO states that LRBAs are not banned, and the way they operate has not changed. Loans entered into before that date are not affected, including when they are refinanced later. A binding contract exchanged before 10 August 2026 is also not caught by the new rule.

The catch is that the property must stay business real property for the whole life of the loan. If your business moves out and the office is left unused with no plan to lease it, the fund could breach the borrowing rules. Looking for a new tenant does not on its own end business use, but abandoning plans to lease it does.

The Pros of Using an SMSF Loan for an Office Building

The main advantages are that rent goes to your own retirement savings, and the fund may get tax concessions on the income and gains. Depending on your circumstances, it can also add a property to your super without using your personal savings outright.

A complying fund in accumulation phase is taxed at a concessional 15 per cent on its assessable income. If the fund owns the asset for at least 12 months, it gets a one-third CGT discount, which gives an effective rate of 10 per cent on the discounted gain. In pension phase, some income may be exempt, but a capital gain is not automatically exempt. Your accountant can tell you how this applies to your fund.

Consider a business owner whose company pays rent on a leased office. The company moves to a fund-owned office on a commercial lease, and the rent now flows into the member's super instead of to an outside landlord. The rent has to be at market level. If it is set lower or higher than the market rate, the income can be treated as non-arm's length income and taxed at 45 per cent.

The Cons: Concentration, Cash Flow and Compliance

The main downsides are that a large part of your super sits in one illiquid asset, the fund must keep servicing the loan, and the compliance load is heavier. Property can't be sold quickly if the fund needs cash for pension payments.

Here are the trade-offs that tend to matter most:

• If your business struggles, it may struggle to pay rent, and the fund still has to meet its repayments.
• The loan cannot be used to improve the property. Drawdowns for capital improvements are not allowed, so renovations need to be funded from the fund's own cash.
• You cannot put an existing fund asset into the loan arrangement.
• Breaching the rules can bring compliance action from the regulator.

If a member's total super balance is above $3 million, Division 296 applies from 1 July 2026. It adds 15 per cent tax on the proportion of their total super earnings that relates to the part of their balance above $3 million, and a further 10 per cent on the proportion relating to the part above $10 million. The thresholds are for 2026-27 and will be indexed. The tax is assessed to the individual. LRBA amounts are never included in a member's balance for this purpose.

How Much Can an SMSF Borrow for Commercial Property?

Your borrowing capacity depends on the fund's income, existing assets and the lender's policy, not your personal income alone. Lenders look at the rent the property will earn, the fund's contributions and its cash reserves.

LVR limits and deposit requirements for commercial loans through an SMSF vary by lender, so they are worth comparing early. Rates are usually quoted as either variable or fixed, and each has a trade-off. A fixed rate gives certainty but can carry break costs if you exit early. A variable rate can move with the market and may allow extra repayments.

As an illustration only, a fund borrowing $600,000 at an example rate of 6.75% p.a. over 25 years would have principal and interest repayments of roughly $4,145 a month. That is about $49,700 a year before any other costs. If the rent from the office, after outgoings, would not comfortably cover that plus the fund's other expenses, the fund may need member contributions to fill the gap. Contributions are limited by the caps, which are $32,500 concessional and $130,000 non-concessional for 2026-27. You can test numbers with our loan repayment calculator.

How a Broker Helps You Compare SMSF Lenders

Lender policies for SMSF commercial loans differ, so comparing them can help. A broker can do that for you and also helps you line up the paperwork before the loan application, so the structure is right before you sign a contract.

If you are self employed, lenders will also want to see how the business performs, since the rent comes from your own company. Our commercial property loans and self employed borrowing pages explain what lenders typically look at. You will need a lawyer to set up the holding trust and an accountant to confirm the tax position. The broker's fee or commission is a cost to understand upfront, so ask how it works.

If you already hold an SMSF loan, SMSF loan refinance is worth a look. A loan entered into before 10 August 2026 is not affected by the new rule when it is refinanced.

Call one of our team or book an appointment at a time that works for you, and we will talk through whether an SMSF office purchase suits your business and your retirement plans.

Frequently Asked Questions