While the recent ban on residential LRBA lending has dominated headlines and amplified noise across the industry, it shouldn’t obscure a simple truth: commercial property has always been a strong investment case inside an SMSF structure.
For investors who looked beyond residential, commercial property has consistently delivered a compelling risk-return profile – reliable rental income underpinned by long-term leases, tenants with genuine business motivation to maintain their premises, and, for business owners, the unique structural advantage of owning the very asset their enterprise operates from with rental income flowing directly back into their own superannuation fund.
Stamford Capital has been arranging commercial property finance for over 15 years – long before this conversation became fashionable. What we’re seeing from our industry partners is a genuine shift in discourse, and a real appetite for education to demystify how SMSF financing actually works. Accountants and financial advisers are increasingly reinforcing this same message to their clients: for most business owners and investors in higher tax brackets, owning commercial property through an SMSF is one of the most tax-effective structures available in Australia, particularly in accumulation phase and even more so in pension phase, where income and capital gains can become entirely tax-free.
Borrowing via an SMSF, however, comes with its own set of rules and challenges, from structuring the loan correctly through to ensuring the right trust and lease arrangements are in place from day one.
The recent legislative changes to residential LRBAs simply amplify a conversation we’ve already been having with clients for years. If you’re now considering commercial property within your SMSF for the first time – or looking to work with an adviser who genuinely understands the structure required to facilitate finance – you’re in the right place.
Commercial property SMSF lending is a specialist area.
Unlike standard commercial lending, SMSF transactions require a working understanding of:
- Limited Recourse Borrowing Arrangements (LRBAs)
- Bare trust/custodian trust structures
- Related-party leasing rules
- Commercial property valuation and tenancy risk
- Lender credit policy
- SMSF liquidity and contribution capacity
- Timing around contract exchange, trust establishment and settlement
My role is to help clients and their advisers navigate this process clearly and commercially.
Over the coming weeks, we’ll be unpacking the key aspects of purchasing and maintaining commercial property through an SMSF – including why our clients are seeing this as a popular strategy, the advisers you will need to think about to ensure regulator adherence and practical examples and case studies
If you’re looking to buy commercial property in your SMSF speak to our SMSF finance specialist to ensure you have the best funding structure to achieve the best outcome.
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Adarsh Chava
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