SMSF Commercial Property Loans

Her accountant had mentioned SMSF property before, but it always sounded too complicated. Too many rules. Too many structures. Too much risk of getting it wrong with the ATO.

The moment it clicked

What changed was a conversation about retirement. Kate was 52. Her SMSF had $620,000 sitting mostly in managed funds returning around 4%. Meanwhile, she was paying rent to a landlord whose commercial property was probably returning 6–7% — funded by her money.

She was effectively paying someone else's retirement while underperforming in her own.

The idea was simple: what if her SMSF bought the practice premises and she became her own tenant? The rent she was already paying would flow into her super instead of a landlord's pocket. Same cash outflow from the business. Completely different destination.

Where the banks said no

Kate went to her bank first. They'd held her business accounts for nine years. They said no. Not because her financials were weak — the practice turned over $1.2 million with strong margins. They said no because they'd stopped writing new SMSF property loans entirely. The major banks had quietly exited SMSF lending one by one.

Her mortgage broker — a residential specialist — didn't know where to send her either. SMSF commercial property sits in a gap between residential lending and business banking that most brokers don't touch.

Finding the right structure

When Kate reached us, the first thing we did was assess the full picture: her SMSF balance, contribution capacity, the property she had in mind, and the rental yield it could support. Within 48 hours she had a clear borrowing capacity figure and a shortlist of three specialist lenders who actively wanted this type of deal.

The property was a ground-floor strata suite in an established medical precinct — $1.35 million. With a 75% LVR, her SMSF needed approximately $337,000 as deposit plus around $90,000 for stamp duty, legals, LRBA setup, and valuations. That left her fund with a comfortable liquidity buffer above the 12-month minimum lenders require.

We coordinated the bare trust establishment, the LRBA documentation, the lender submission, and the settlement timeline — all running in parallel rather than sequentially. Formal approval came through in 19 days.

The numbers that matter

Kate's practice now pays $78,000 a year in rent to her own SMSF. That rent is fully tax-deductible to the business — exactly the same as before. But inside the SMSF, the rental income is taxed at just 15%. When Kate transitions to pension phase in a few years, that drops to zero.

Her loan repayments are approximately $6,800 a month. The rent covers the repayments with room to spare. She's building equity in an asset that belongs to her retirement, using money she was already spending.

Eleven years of rent at roughly $65,000–$78,000 per year means Kate paid somewhere around $750,000 to her landlord over that period. That money is gone. The property she now owns has already been valued $80,000 above the purchase price.

What Kate says now

She doesn't talk about rates or LVRs. She talks about the fact that for eleven years she wrote a cheque every month to build someone else's wealth, and now that same cheque builds hers. That's the shift. Not a product. Not a structure. A decision that redirected a decade of dead money into an asset she'll own outright by retirement.