Level 2, 1 Prowse Street WEST PERTH WA 6005, Australia

Benefits of an SMSF Commercial Property Investment (Depth Guide)

  • Home
  • /
  • Blog
  • /
  • Benefits of an SMSF Commercial Property Investment (Depth Guide)

October 20, 2023

An SMSF or self-managed super fund is a superannuation fund that allows individuals to manage their retirement savings. One of the most popular investment options is SMSF property investment.

Investing in a Self-Managed Super Fund (SMSF) for a commercial property can be a great way to secure your financial future. It offers several advantages like tax efficiency, greater control over investments, and the potential to build wealth. It is necessary to conduct thorough research and seek advice from a qualified accountant before investing in an SMSF commercial property.

Benefits of Investing in Commercial Property

Benefits of Investing in Commercial Property

Here are the potential benefits of an SMSF property investment:

  • Steady Income: Commercial properties often provide a stable and predictable income stream through rental payments. This income can be tax-effective when received by your SMSF.
  • Tax Efficiency: Rental income earned by an SMSF from a commercial property is taxed at a concessional rate of 15%, and if the property is for more than 12 months, any capital gains from the sale of the property are taxed at 10% or 0% if the property is in the pension phase. SMSF tax return includes collecting financial statements, transaction records, investment details, and other necessary documents for the SMSF.
  • Asset Growth: Commercial properties have the potential to appreciate over time, leading to capital growth for your SMSF. It can enhance your retirement savings.
  • Diversification: Investing in commercial property allows you to diversify your SMSF’s investment portfolio. Diversification can help spread risk across different asset classes and potentially increase overall returns.
  • Control: With an SMSF, you have control over your investment decisions, including the choice of the commercial property you invest in.
  • Lease Agreements: Commercial leases are often long-term, providing a reliable income source. Additionally, businesses tend to take good care of the properties they lease, reducing maintenance costs for the SMSF.
  • Potential for Capital Improvements: You can use SMSF funds to renovate or improve the commercial property, potentially increasing its value and rental income.
  • Leverage: An SMSF can borrow to invest in commercial property, which can magnify the potential returns. However, it’s important to note that borrowing within an SMSF comes with strict regulations.
  • Business Relationships: Owning commercial property can provide opportunities for networking with other businesses, which can benefit future investments or partnerships.

What are the Drawbacks of an SMSF Property Investment?

Investing in self-managed super fund property can offer significant benefits, but there are also drawbacks and risks that you should consider:

  • Liquidity Issues: Property is a relatively illiquid asset, meaning it can take time to sell it if you need to access your funds quickly. This lack of liquidity can cause your financial circumstances to change suddenly.
  • High Costs: Purchasing and maintaining a property within an SMSF can be expensive. There are costs associated with property acquisition (such as legal fees and stamp duty), ongoing property management fees, maintenance costs, and potential capital gains tax when you sell the property.
  • Market Volatility: Property markets can be volatile. Economic downturns or changes in the local property market can affect the value of your investment. Property values can fluctuate, impacting the overall value of your SMSF.
  • Regulatory Compliance: SMSFs are subject to strict regulations. There are specific rules about how you can lease the property.  It is best to consult a tax professional for SMSF tax returns in Perth to ensure accuracy and compliance with relevant tax laws and regulations. 
  • Borrowing Risks: If you borrow to purchase a property within your SMSF, you increase your exposure to financial risks. If the property’s value decreases significantly, you may owe more than the property is worth, which is known as negative equity.
  • Property Management Challenges: Self-managed superfund property investment refers to using a self-managed superannuation fund to invest in property assets. Managing a commercial property can be complex. Finding and retaining reliable tenants, handling maintenance and repairs, and dealing with legal and financial aspects of property management can be time-consuming and stressful.
  • Limited Diversification: Placing a substantial portion of your SMSF in a single property can limit your ability to diversify your investments. Diversification can help spread risk, and lack of it can increase the vulnerability of your SMSF to market fluctuations.
  • Interest Rate Risks: If your SMSF has borrowed to invest in property, it’s vulnerable to interest rate fluctuations. If interest rates rise significantly, your loan repayments can increase, impacting your fund’s cash flow. Consult a relevant professional or seek specialized resources for accurate and up-to-date SMSF compliance and regulations.
  • Complexity and Responsibility: Managing an SMSF, especially with property investments, trustees must understand and comply with legal and financial regulations, which can be challenging for those without a background in finance or law.

How Can an SMSF Adviser Help You With Your SMSF?

While managing your SMSF, having a knowledgeable accountant and SMSF adviser can be invaluable. These professionals can help you navigate the complex regulations and tax laws of owning an SMSF. They can also guide super investment property strategies that align with your financial goals, such as investing in commercial property.

SMSF accountants can assist with preparing financial statements and tax returns and ensuring compliance with regulations. Your SMSF adviser can advise on investment opportunities and assist with managing your fund’s assets. Utilizing their expertise can help you make informed decisions and avoid costly mistakes. 

Self-managed super funds (SMSFs) buying property guides can help you through the complex regulations and help you make informed decisions tailored to your financial situation and goals.


In conclusion, investing in commercial property with a Self-Managed Super Fund (SMSF) can be a wise decision for investors. Using your super to buy an investment property is possible through a Self-Managed Super Fund (SMSF) in some countries, including Australia. 

SMSF allows them greater control over their investment decisions and enables them to take advantage of tax benefits. However, it is crucial to the potential drawbacks of superannuation property investment, such as the high costs associated with setting up and managing an SMSF. Your accountant and SMSF adviser can help you navigate the complexities of SMSF and make informed investment decisions that align with your financial goals.

Complete the form below for a fast response

Wish to setup SMSF

Do you have additional personal funds which you would contribute into the fund if your total is less than $200,000?