How do people pay for their SMSF Commercial Property?

When people first consider purchasing commercial property through a self-managed super fund, one of their biggest questions is: **How will the SMSF afford the property and meet the ongoing costs?**

The answer generally involves several sources working together: the SMSF’s existing balance, an approved loan, rental income and ongoing super contributions.

## The Current SMSF Borrowing Rules

Since 10 August 2026, a new limited recourse borrowing arrangement used by an SMSF to purchase real property generally requires the property to qualify as business real property.

In simple terms, this means an SMSF using borrowed funds can purchase eligible commercial property, such as an office, warehouse, showroom, retail premises or another property used wholly and exclusively in a business.

The change applies to borrowing arrangements. An SMSF purchasing property without borrowing is subject to different considerations and should obtain appropriate professional advice.

## Using Your Super Towards the Purchase

An SMSF can use part of its available balance towards the commercial property’s deposit and approved purchasing costs.

The remaining purchase price may be funded through a limited recourse borrowing arrangement. This type of loan is established specifically for an SMSF, and the property is normally held in a separate holding trust until the loan has been repaid.

The SMSF must retain enough money to cover its other responsibilities and maintain a suitable cash buffer. It is rarely sensible to use the fund’s entire balance for the deposit and leave nothing available for unexpected costs or a period without a tenant.

## Rental Income Helps Meet the Loan Costs

Once the property is leased, the rent is paid directly into the SMSF’s bank account.

That rental income can assist the fund with:

- Loan interest and repayments

- Property management costs

- Insurance and maintenance

- Accounting and SMSF administration

- Other property-related expenses

Commercial property in a well-researched location may offer a solid rental return, but rental income and occupancy are never guaranteed.

## The Tenant May Pay Property Outgoings

Many commercial leases are structured so the tenant pays or reimburses some or most of the property outgoings in addition to the rent.

Depending on the individual lease, these outgoings may include council rates, water charges, body corporate costs, building insurance and certain maintenance expenses.

This can reduce the amount the SMSF must contribute towards holding the property. However, not every lease is the same, so the tenant’s responsibilities must be clearly stated in the lease and reviewed by an experienced commercial property solicitor.

## How Is a Cash-Flow Shortfall Covered?

During the early years, there may be a difference between the rent received and the total cost of interest, loan repayments and other fund expenses.

Ongoing employer and personal super contributions paid into the SMSF bank account may help the fund meet this difference, provided those contributions comply with the applicable contribution caps and superannuation rules.

Before purchasing, a proper cash-flow assessment should show:

- The expected rent

- Which outgoings the tenant will pay

- Loan repayments and interest

- SMSF administration costs

- Possible vacancy periods

- The contributions expected to enter the fund

- The cash buffer remaining after settlement

Contributions may be sufficient to support a manageable shortfall, but this must be assessed for each SMSF and should never be assumed.

## Does This Mean No Personal Out-of-Pocket Property Costs?

When the purchase is structured correctly, the deposit, approved acquisition costs and ongoing property expenses are generally paid from the SMSF bank account—not directly from the members’ personal bank accounts.

The SMSF must still have sufficient funds, rental income and permitted contributions to meet those costs. Money held in an SMSF remains retirement savings, and purchasing costs and loan repayments will reduce the cash available within the fund.

## What Type of Commercial Property Is Available?

Commercial property opportunities may range from approximately $400,000 to more than $1 million, depending on the location, property type, size, tenant and lease arrangements.

Invest Realty Australia has direct access to commercial property opportunities across many locations throughout Australia. We research the property, location, rental arrangements and available information so buyers can consider suitable opportunities with greater confidence.

## Our No-Upfront-Cost Program

Invest Realty Australia may also offer eligible clients a no-upfront or out-of-pocket cost program through our trusted professional partners.

Under this program, agreed establishment and service costs may be deferred until the SMSF has been established and the client’s super funds have been rolled into the SMSF bank account.

These costs are deferred rather than removed and will ultimately be paid by the SMSF. Eligibility, provider approval and individual terms apply.

## Getting the Structure Right

Purchasing commercial property through an SMSF can provide greater control over a major retirement asset, but the fund must be established and managed correctly.

Invest Realty Australia provides property research and buyers advocacy. SMSF establishment, borrowing, accounting, legal, taxation and financial advice must be provided by appropriately qualified and licensed professionals.

With the right property, a properly structured loan, rental income, agreed tenant outgoings and a suitable cash-flow buffer, commercial property may become a valuable long-term asset within an SMSF.

*This article provides general property information only and does not constitute personal financial, taxation, legal or credit advice. SMSF borrowing and property investment may not be suitable for everyone. Property values, rental returns, vacancies, interest rates and expenses can change. Seek advice from appropriately licensed professionals before establishing an SMSF, borrowing or purchasing property.*

*Sources: Australian Government, Treasury Laws Amendment (Tax Reform No. 1) Act 2026; Australian Taxation Office; ASIC Moneysmart.*