Commercial property has long appealed to SMSF trustees, and since 10 August 2026, the details matter even more. Under the rules that commenced on 10 August 2026, relevant new limited recourse borrowing arrangements (LRBAs) can be used to acquire real property only if it qualifies as business real property, subject to applicable transitional exceptions. So before you open a property portal, work out what your fund can buy, how it can pay for it, and who needs to be involved.
What has changed for SMSF property buyers?
According to the ATO, LRBAs are not banned. The change restricts what real property they can finance. Existing LRBAs, refinancing of those loans, and contracts exchanged before 10 August 2026 are unaffected. The ATO also says the identity of the lender makes no difference, so the rule applies whether the loan comes from a bank or someone else.
Business real property generally means land and buildings used wholly and exclusively in a business. Warehouses, offices and shops are the usual fit. The property must also keep qualifying for the whole life of the loan.
Mixed-use premises need extra care. The SMSF Association has warned that buildings used partly for other purposes, such as some professional premises, often won’t qualify. The ATO has said not all mixed-use property is automatically excluded, but the significance of any non-business use must be considered, so get advice before relying on it. Residential property is still possible: an SMSF can buy it directly if it meets the other rules, but it can't be financed with an LRBA.
Start with the fund, not the property
Under the ATO's investment requirements, every SMSF investment must meet the sole purpose test, be made at arm's length at market value, and fit the fund's written investment strategy. A breach can mean the fund loses its tax concessions and trustees face penalties.
In practice, your strategy should explain why commercial property suits the members' ages, balances and retirement goals. Trustees must also review that strategy regularly, not just once, so it should reflect the purchase you are planning. Ask some honest questions:
Is the fund large enough that one property won't dominate it?
Can it cover costs, repairs and any vacancy without forced selling?
Does it hold enough cash to pay pensions or benefits while the property is held?
Property is hard to sell quickly, so liquidity deserves real thought.
Property types and what to look at
Industrial units, offices, retail shops and medical suites all suit different tenants and carry different risks. Whatever the type, look closely at:
The lease: time remaining, rent review terms, and who pays outgoings.
The tenant: the type of business, its financial strength, and how hard it would be to replace.
Location and demand: zoning, access, parking, and nearby vacancies. Check that the zoning allows the tenant's actual use.
The building: age, condition, and any upcoming capital works.
The real numbers: net rent after costs, not just the advertised yield.
Also ask how long the space might sit empty if the tenant leaves, and what it would cost to re-let. Perth precincts can behave very differently from each other, so local knowledge counts for more than a headline figure.
Leasing the property to your own business
Many trustees ask about this. Qualifying business real property is generally excluded from the SMSF's in-house asset restrictions. A fund may lease it to a related business, provided the applicable SMSF rules are met, including arm’s-length terms and market-value rent.
The rent must be genuinely market-based, and you should be able to prove it. A rental appraisal from a professional, such as a real estate agent, is commonly used as evidence when the lease starts. The reason for buying must also be to benefit members' retirement, not to suit the business.
Common mistakes to avoid
Falling for the property first. Check eligibility and structure before you inspect anything.
Assuming mixed-use counts. If part of the building has a non-business use, get advice before going further.
Skipping the full cost picture. Transfer duty (commonly called stamp duty), legal fees, due diligence, vacancy periods and repairs all come out of the fund.
Overlooking lender requirements. Lenders set their own conditions for SMSF loans, so speak to them before you make an offer.
Weak records. Trustees must keep records of all fund decisions and actions. Keep your appraisals, strategy updates and lease documents together.
Concentrating too much in one asset. A single property can leave the fund exposed if the tenant leaves.
Bring your advisers in early
An SMSF purchase works best as a team effort. Your licensed financial adviser, accountant, SMSF-specialist lawyer and lender each look at a different part of the deal. They can confirm the property qualifies, the structure works and the investment strategy supports it. Ask them early about timing too, as fund documents and lender approvals can take time to arrange.
How Lorven Buyers Agency can help
We at Lorven Buyers Agency are a licensed, independent buyer's agent that works only for buyers. For SMSF purchases, our team sources and assesses suitable properties and negotiates on your behalf, working alongside your appropriately licensed financial, legal and tax advisers. We do not give financial, legal or tax advice, so independent advice is recommended.
Your next step
Once your advisers confirm your fund's position, the property search becomes much more focused. If you're considering SMSF commercial property in Perth or WA, book a consultation or call 1300 143 999 to talk through your brief. You can also follow Lorven on LinkedIn and Instagram.
Disclaimer: This article is general information only, current as at the date of publication, and does not constitute financial, legal, tax or superannuation advice. Superannuation and SMSF rules change, and every fund’s circumstances are different, so trustees should obtain independent advice from appropriately qualified professionals before acting on anything covered here.