Owning the premises you operate from is one of the most effective ways to create stability and build long-term wealth. For many business owners, this goal can be achieved through a self-managed super fund (SMSF) – a structure that allows you to invest your retirement savings directly in commercial property.

When done correctly, this approach can align your business and personal wealth strategies, giving you control, flexibility, and significant tax advantages along the way.

Why SMSFs and commercial property work so well

An SMSF gives you direct control over how your superannuation is invested. While most people think of super as shares or managed funds, an SMSF can also own commercial property. If structured properly, your business can lease that property from the SMSF on fully commercial terms.

That means every rent payment you make becomes income to your own super fund – helping you grow retirement wealth while providing your business with a stable base of operations.

The property is held in a tax-advantaged environment. Rent income is generally taxed at only 15 percent inside the fund, and once in pension phase, capital gains can become tax-free. Over time, that can make a significant difference to your retirement balance.

How it works in practice

The SMSF purchases the property, often with a mix of cash from existing super balances and borrowings under what’s known as a limited recourse borrowing arrangement (LRBA). Your business becomes the tenant, paying rent to the SMSF under a formal lease agreement that meets market standards.

The rent your business pays is a tax-deductible expense, while the income your SMSF receives is taxed at a concessional rate. It’s a simple structure when managed correctly, but one that must follow strict superannuation rules.

What to watch for

While the strategy can be powerful, it requires careful planning. The purchase must comply with the sole purpose test – meaning the investment is made for retirement benefits, not to provide a short-term advantage to the business. The rent must be set at market rates and paid on time, and the lease must be properly documented and managed.

Borrowing within an SMSF is also tightly regulated, so professional advice is essential before setting up any structure or signing a contract. There are strict conditions around the type of loan that can be used, who holds the property title, and how repayments are managed.

Long-term benefits

For many business owners, this approach delivers a sense of control and security that renting cannot match. The business gains a long-term home, free from the uncertainty of lease renewals or external landlords. The SMSF, in turn, holds a quality, income-producing asset that supports long-term retirement goals.

It’s also a strategy that can support succession planning. When you eventually step back from the business, your SMSF can continue to receive rent from a new tenant, creating an ongoing income stream through retirement.

Is it right for you

Purchasing commercial property through an SMSF can be a smart way to align business goals with personal wealth creation, but it’s not for everyone. The fund must have enough balance to support the purchase, and the property must be suitable for commercial use. It also requires discipline to ensure all arrangements remain compliant over time.

Done properly, it can be one of the most effective ways to build long-term wealth and take control of your financial future.

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