If you own a business and its premises, your SMSF can own those premises and collect the rent your business pays. That's the appeal: the rent your business would pay a landlord goes into your own retirement savings instead, taxed at super rates, and the property sits in a structure that is generally out of reach of business creditors.
It only works if the property is genuinely business real property (BRP), the transfer is done at market value and in the right order, and the lease is run like a lease between strangers. This guide explains the definition, the transfer, the lease and the numbers. It's general information: whether to put your premises into super is a financial product decision for a licensed financial adviser, and the lease and transfer documents are for your solicitor. We do the tax, accounting and compliance side, and work with both.
What is business real property for an SMSF?
Section 66(5) of the SIS Act defines it. In plain English, business real property is:
- a freehold or leasehold interest in land (including the buildings and fixtures on it),
- that is used wholly and exclusively in one or more businesses,
- whether the business is carried on by the fund or by someone else, such as your company as tenant.
The ATO's view is set out in ruling SMSFR 2009/1. The points that decide most real cases:
- "Wholly and exclusively" allows for trivial non-business use, nothing more. Minor, insignificant or trifling private use doesn't break it. A flat upstairs, a director's apartment, or storing the family boat in half the warehouse does.
- Use is what counts, not zoning. A commercially zoned building sitting empty isn't automatically BRP. A converted house used entirely as a dental practice can be.
- The business can be anyone's. A shop leased to an unrelated retailer is BRP just as much as a factory leased to your own company.
- Primary production has a special rule. Farmland used in a primary production business can still be BRP with a dwelling on it, if the dwelling and its land (up to two hectares) are used mainly for private purposes and the property's main use isn't private or domestic.
- Holding the land through a trust is different. An interest you hold as a beneficiary of a trust isn't BRP in itself. Units in a unit trust that owns BRP are a separate question (see our 13.22C unit trust guide).
Does it qualify? A quick test
| Property | Usually BRP? | Why |
|---|---|---|
| Warehouse leased to your company, used for its business | Yes | Used wholly and exclusively in a business |
| Medical suite leased to an unrelated practice | Yes | The business doesn't have to be yours |
| Office floor sitting vacant while being genuinely marketed for lease | Often yes | Short vacancies while seeking a business tenant don't usually break it |
| Shop with a residential flat upstairs | No | Part of the property is residential |
| Residential house rented to tenants | No | Renting a home isn't using it in a business |
| Farm with a homestead on under two hectares | Often yes | Primary production rule, if the main use is farming |
| Vacant land with no business activity | Usually no | Land has to be used in a business |
| Holiday unit in a resort letting pool | Needs specific advice | Depends on how the letting arrangement works |
Why does business real property matter so much?
Because it is the exception that switches off three of the strictest SMSF rules at once.
| SMSF rule | Normal effect | With business real property |
|---|---|---|
| No buying assets from related parties (s 66) | Fund can't buy property from you, your relatives or your entities | Fund can buy BRP from them, at market value |
| In-house asset limit (5%) | An asset leased to a related party counts towards a 5% cap | BRP leased under a legally binding lease is excluded |
| LRBA restriction from 10 August 2026 | A new LRBA can't be used to buy residential property | A new LRBA can be used to buy BRP; keep its use consistent while the loan runs, because a change of use raises compliance questions |
That last row is new. Since 10 August 2026, paragraph 67A(2)(c) of the SIS Act (inserted by Schedule 5 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026) requires real property bought under a new LRBA to be business real property. The BRP test is now the question that decides whether a geared property purchase can go ahead at all. See our SMSF borrowing guide for the detail.
How do I transfer my business premises into my SMSF?
Order matters. Here's the sequence we use.
- Confirm the property is BRP today, using the test above, and confirm it will stay BRP. If part of it is lived in, stop here.
- Check the fund can take it. The trust deed must allow it, and the investment strategy must deal with the concentration and liquidity risk of holding one large asset.
- Get an independent valuation at or close to the transfer date. The fund must pay market value, and the auditor will want evidence.
- Work out how the fund will pay. Cash from the fund, a contribution of part of the value (an "in specie" contribution), or a mix. Any part that's a contribution counts against your caps.
- Model the costs on the way in. Stamp duty on the transfer, CGT for you as seller (and whether the small business CGT concessions apply), and GST if the property is used in an enterprise.
- Have your solicitor prepare the contract and the lease. The lease should be signed before or at settlement, at a market rent supported by a valuation or agent's appraisal.
- Settle, then run it at arm's length. Rent paid into the fund's bank account, on time, every month, with outgoings handled exactly as the lease says.
Watch out: If the fund borrows to buy the property (an LRBA), the bare trust and its trustee company must be set up before contracts are signed, and the contract must be in the right name. Getting this wrong can mean paying stamp duty twice.
Contributing part of the property instead of selling it
When the fund pays less than market value, the difference is a contribution by you. That's allowed, but it has to fit your caps. For 2026–27:
| Cap | Amount | Notes |
|---|---|---|
| Concessional contributions cap | $32,500 | Usually used up by employer and salary sacrifice contributions |
| Non-concessional contributions cap | $130,000 | Nil if your total super balance was $2.1 million or more at 30 June 2026 |
| Bring-forward of non-concessional caps | Up to $390,000 over three years | Only if your total super balance was under $1.84 million at 30 June 2026 |
| CGT cap amount | $1,935,000 (lifetime) | For amounts from the sale of eligible small business assets under the 15-year and retirement exemptions, if elected correctly |
Exceed a cap and you pay extra tax, so the split between cash and contribution needs to be worked out before settlement. Our contributions and caps guide explains how the caps interact, and our small business CGT concessions guide explains when the CGT cap can be used.
How do I lease the property to my own business?
Treat it as if your fund were a stranger's fund. In practice:
- A written, legally binding lease. The in-house asset exclusion depends on it. A handshake arrangement doesn't qualify.
- Market rent, supported by evidence. An independent valuation or a written agent's appraisal at the start, and a review mechanism (CPI or market review) that the fund actually applies.
- Rent paid on time, into the fund's account. Arrears that build up can be treated as the fund lending to a related party.
- Outgoings handled as the lease says. If the tenant pays rates, insurance and land tax, it must actually pay them. If the fund pays, it recovers them as the lease allows.
- Rent reductions only on commercial terms. If trade is bad, a rent reduction must be what an unrelated landlord would agree to, in writing, with reasons. The ATO allowed temporary relief during COVID-19, but that relief has ended.
Getting the rent wrong in either direction is a problem:
| If the rent is… | What happens |
|---|---|
| Above market | The excess can be non-arm's length income, taxed at 45% in the fund. Your business may also have its deduction questioned |
| Below market | The fund is giving a benefit to a related party. That breaches the arm's length and sole purpose rules |
| Unpaid or deferred informally | It can be treated as a loan to a related party, an in-house asset and a breach the auditor must report |
Our NALI and NALE guide covers the 45% rate in detail.
Worked example: a clinic moves into super
Example only, with round numbers. Say two doctors own their clinic building personally, as joint tenants. It is used entirely by their practice company. Their two-member SMSF has $900,000 in cash. An independent valuer puts the building at $1,200,000 and the market rent at $90,000 a year plus GST.
The transfer.
| Item | Amount |
|---|---|
| Market value | $1,200,000 |
| Paid by the SMSF in cash | $840,000 |
| In specie contribution (non-concessional, $180,000 each, within the bring-forward cap if eligible) | $360,000 |
| Stamp duty, payable by the fund | Varies by state; can be a large figure on a $1.2m transfer |
| CGT for the doctors as sellers | Depends on cost base and whether small business CGT concessions apply |
The fund keeps $60,000 in cash, less duty and costs. That's thin, so the investment strategy and the members' contribution plans need to show how the fund will rebuild liquidity.
The rent, year 1.
| SMSF | Amount |
|---|---|
| Rent received from the practice company | $90,000 |
| Rates, insurance, land tax, repairs (if not recovered under the lease) | ($15,000) |
| Accounting, audit and valuation | ($6,000) |
| Net income | $69,000 |
| Tax at 15% (accumulation phase) | $10,350 |
The practice company deducts the $90,000 rent, as it would with any landlord. Once a member moves into retirement phase, the share of the fund's income supporting retirement-phase pensions is tax-free, subject to the transfer balance cap.
What could go wrong in this example. A consulting room is sublet to an unrelated specialist (fine, it's still business use). A doctor's adult child is allowed to sleep in a back room for a few months (not fine: private use can end BRP status). The practice has a slow quarter and stops paying rent for three months without any formal variation (not fine: a loan to a related party). Each of these is the kind of thing an auditor finds and must report.
What happens to the property later?
Three events need planning from day one.
- The business sells or moves. The fund can lease to a new tenant, related or unrelated. If the premises are vacant for a long time, BRP status (and an LRBA, if there is one) can be at risk.
- A member retires. The fund has to pay minimum pension amounts every year. Rent usually covers this, but not if the property is vacant. See our SMSF pension guide.
- A member dies. Their benefit must be paid out. If the fund's main asset is the building, it may have to sell it or transfer it out in specie. Death benefit nominations and the other members' plans should be set up with this in mind. Our SMSF succession guide explains the options.
Families who want the premises to stay in super across generations sometimes add adult children to the fund. That has its own trade-offs, set out in our six-member SMSF guide.
Mistakes we see with business real property
- Assuming commercial zoning means BRP. It's the use that counts.
- A residential component, even a small flat, in a building the fund buys from a related party. The purchase itself can then be a breach.
- No signed lease, or a lease that expired years ago with the tenant still in occupation on informal terms.
- Rent set by guesswork and never reviewed.
- Rent arrears that build up during a tough patch.
- Mixing outgoings, with the business paying some fund bills and the fund paying some business bills.
- Transferring the property before checking the caps, creating an excess contribution.
- Forgetting stamp duty in the cash flow, so the fund is left with no buffer.
- Private use creeping in, which ends BRP status and can turn the lease into a prohibited in-house asset.
How BPAG helps with business real property
We look after the accounting, tax and compliance on both sides of the arrangement: the fund that owns the premises and the business that rents them.
- Before the transfer, we test the property against the BRP definition, model the CGT, stamp duty and contribution caps, and give you a step-by-step plan for your solicitor and adviser. Our super and SMSF agent works through the technical points, such as the primary production dwelling rule or whether a vacancy is a problem; your accountant checks every answer.
- The lease. Our commercial lease review agent reads the lease and flags key dates, option deadlines and outgoings clauses, and our CPI rent review agent runs each year's rent review and drafts the notice. Your accountant reviews both, and your solicitor remains responsible for the lease itself.
- Every year, we check the rent was paid in full and on time, outgoings were dealt with as the lease says, and the property was valued, before we prepare the fund's financial statements and annual return and coordinate the independent audit.
The agents draft. Qualified accountants review and sign off, and nothing goes to you, the auditor or the ATO without a person approving it. If you run a practice, our medical practice accounting page explains how we look after the business side.
What to send us
- The property title and a short description of how every part of the building is used
- Any existing lease, and who the tenant is
- A recent valuation or agent's appraisal, if you have one
- The fund's latest financial statements, investment strategy and trust deed
- Each member's total super balance at 30 June 2026 (on the member statement)
- Your cost base records for the property, if you're the seller
For the wider rules on property in super, see our SMSF property guide, or start with our SMSF accounting and audit service.
Frequently asked questions
Does a medical suite in a residential-style building count as business real property?
It can. What matters is how the property is used, not how it looks or how it is zoned. A house that has been fully converted and is used wholly and exclusively as a medical practice can qualify. If any part is still lived in, it generally won't.
Can the SMSF lease the premises to my company rather than to me?
Yes, and that's the usual set-up. The business real property exception covers a lease to any related party, including your company or your family trust, provided the property is used wholly and exclusively in a business and the lease is legally binding and at market rent.
What if my business moves out and the premises sit empty?
A short vacancy while the fund looks for a new tenant, with the property genuinely offered for business use, generally doesn't stop it being business real property. If the property is left empty for a long period or put to private use, its status can be lost, which matters a lot if it is held under an LRBA. Talk to us before the business moves.
Can my SMSF buy my farm?
Farmland used in a primary production business can be business real property, including a farmhouse on up to two hectares used mainly for private purposes, provided the property's main use is primary production. Transfers of farms raise extra stamp duty, CGT and succession questions, so get the whole plan modelled first.
Do I have to charge GST on rent the SMSF receives from my business?
If the SMSF's commercial rent (and other taxable supplies) reaches the $75,000 GST registration threshold, the fund must register and charge GST on the rent. Below that it can choose to register. If it does, your business usually claims the GST back on its BAS.
Can the SMSF give my business a rent holiday if trade is bad?
Only on the terms an unrelated landlord would agree to, documented properly. An informal rent holiday or unpaid rent left to build up can be treated as a loan or financial help to a related party, which breaches the SIS Act and can create an in-house asset.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.