Smart ways to buy warehouse property with your SMSF

Your SMSF can still borrow to purchase a warehouse, even under the new borrowing rules that took effect in August.

The changes restrict new borrowing to business real property, which includes warehouses and other commercial assets, while residential property borrowing is no longer permitted for arrangements entered into after 10 August 2026. Pimpama's industrial precincts along Yawalpah Road and the broader northern Gold Coast industrial corridor continue to attract investors using Self-Managed Super Fund loans, particularly those looking to lease property to their own business or secure long-term commercial tenants.

How an SMSF property loan works for commercial assets

A Limited Recourse Borrowing Arrangement allows your SMSF to borrow funds to acquire a single commercial asset, held in a separate holding trust until the loan is repaid. The borrowed funds can cover the purchase price, loan establishment costs, and stamp duty, but cannot be used to improve an asset the fund already owns. If the loan defaults, the lender's recourse is limited to the asset held in trust, not the wider SMSF balance.

The asset sits in a bare trust with your SMSF as the beneficial owner. Once the loan is repaid, legal ownership transfers to the SMSF trustee. Rental income flows to the fund and is taxed at 15 percent during accumulation phase, or may be tax-exempt if the asset supports a retirement-phase pension.

Consider a Pimpama-based tradesperson who operates a plumbing business and wants to purchase a small warehouse in the Yawalpah industrial estate. The SMSF borrows to acquire the property, the plumbing business leases it at market rent, and rental income supports loan repayments while building the fund's asset base. The lease must be on arm's length terms, meaning the rent charged reflects what an independent tenant would pay for the same premises.

Business real property and the August 2026 changes

Business real property means land and buildings used wholly and exclusively in one or more businesses. The definition focuses on actual use at the time of acquisition, not how the property is marketed or zoned. A warehouse leased to a logistics company, a retail tenancy occupied by a shopfitter, or a storage facility used by a freight operator all qualify, provided the use is genuinely commercial.

Mixed-use properties need careful assessment. A warehouse with an attached office or amenities block typically qualifies if the entire property is used for business purposes. A property that includes a separate residential dwelling on the same title may not satisfy the wholly and exclusively requirement unless it falls under the narrow concession for primary production properties.

The new rules do not prevent SMSFs from buying residential property outright, without borrowing, subject to the usual prohibition on acquiring from or leasing to related parties. But for most investors, borrowing power is the reason an SMSF commercial loan remains attractive. Warehouses in Pimpama's industrial zones, particularly those near the M1 or within the Yaun Street and Yawalpah Road precincts, offer stable tenancies and the potential for capital growth as northern Gold Coast logistics demand increases.

SMSF loan LVR and deposit requirements

Most lenders offering SMSF commercial loans will lend up to 70 percent of the property's value, requiring a 30 percent deposit plus costs. Some lenders cap the loan-to-value ratio at 60 percent for commercial property or restrict lending based on the tenant type, property location, or lease term.

Your SMSF must have enough cash or liquid assets to cover the deposit, stamp duty, legal fees, and loan establishment costs without breaching contribution caps or selling existing investments at an unfavourable time. If the fund does not hold sufficient cash, members may need to make additional concessional or non-concessional contributions within their annual limits.

From 1 July 2026, the concessional contributions cap is $32,500 and the non-concessional cap is $130,000 per member. The bring-forward arrangement allows up to $390,000 in non-concessional contributions over three years for members whose total superannuation balance was below $1.84 million on 30 June of the previous year.

Refinancing an existing SMSF loan after August 2026

Refinancing a compliant LRBA that was in place before 10 August 2026 does not trigger the new restrictions. You can move the loan to a different lender, adjust the interest rate structure, or renegotiate loan terms without the refinanced arrangement being treated as a new borrowing subject to the post-commencement rules.

The refinanced loan must relate to the same asset, maintain the limited recourse character of the original arrangement, and meet arm's length terms. A significant change to the ultimate beneficiaries or a loan used to acquire a different asset ends the original arrangement and starts a new one, which would then be subject to the current rules.

For SMSF loans involving a related party lender, including a family trust or company, the interest rate must fall within the ATO's published safe harbour rates under Practical Compliance Guideline PCG 2016/5. Charging a rate outside this range risks having rental income treated as non-arm's length income and taxed at 45 percent.

Tax treatment for warehouse rental income and capital gains

Rental income received by an SMSF from a commercial tenant is taxed at 15 percent during accumulation phase. Where the fund has commenced a retirement-phase pension and the asset is fully segregated as a current pension asset, rental income may be exempt from tax under the exempt current pension income provisions.

A capital gain on the sale of a warehouse held for at least 12 months attracts a one-third discount, producing a maximum effective rate of 10 percent on the discounted gain. The actual tax depends on the property's cost base, capital improvements, selling costs, and whether the fund holds any capital losses to offset the gain.

From 1 July 2026, Division 296 tax applies an additional 15 percent tax on earnings attributable to total superannuation balances above $3 million, and a further 10 percent on balances above $10 million. A capital gain is only included in the Division 296 earnings calculation if it is realised through a sale or other CGT event. An increase in the warehouse's value while held does not create assessable income or Division 296 fund earnings until the property is sold.

SMSF trustees could elect to adjust the cost base of CGT assets to market value as at 30 June 2026 for Division 296 purposes, recognising accrued value before the new tax commenced. This election applied to all CGT assets held directly by the fund at that date, could not be revoked, and had to be made by the due date of the 2026-27 annual return.

Leasing your warehouse to a related party on arm's length terms

Business real property leased to a related party of the SMSF is excluded from the in-house asset rules, meaning the lease does not count towards the 5 percent in-house asset limit that applies to other related party investments. The lease must be on arm's length terms at market value.

In a scenario where an SMSF purchases a warehouse in the Pimpama industrial precinct and leases it to a family company operating a building supplies business, the rent charged must reflect what an independent tenant would pay for equivalent premises in the same location. An artificially low rent benefits the related party and risks breaching the sole purpose test under section 62 of the SIS Act, which requires the fund to be maintained solely to provide retirement benefits.

Obtaining an independent valuation or rental appraisal before entering the lease provides evidence that the terms are commercial. Rent should be reviewed periodically to ensure it remains aligned with market conditions, particularly if comparable properties in the area have increased or decreased in rental value.

Comparing SMSF lenders and loan structures

Not all lenders offer commercial loans through an SMSF structure, and those that do apply different criteria for loan size, property type, tenant quality, and loan-to-value ratios. Some lenders require a minimum loan amount, often $200,000 or higher, and may not lend on properties outside major metropolitan or regional centres.

Interest rates for SMSF commercial loans are typically higher than standard commercial property loans because the limited recourse nature of the arrangement increases lender risk. Fixed and variable rate options are available, though fixed terms may be shorter than for conventional commercial lending.

Offset accounts offered by an authorised deposit-taking institution can be used in conjunction with an SMSF loan without being treated as a charge over fund assets, provided the offset operates as a genuine transaction account rather than a redraw facility.

When comparing offers, consider the interest rate, loan establishment fees, ongoing account-keeping fees, early repayment or break costs for fixed-rate loans, and whether the lender requires personal guarantees from members. A related party may provide a personal guarantee to the lender, but their recourse must be limited to the asset under the arrangement and not extend to other SMSF assets.

Sole purpose test and compliance obligations

Every decision made by SMSF trustees must be for the sole purpose of providing retirement benefits to members. Purchasing a warehouse at an inflated price to assist a related party, leasing a property at below-market rent to benefit a family business, or allowing a member to use the premises for personal purposes all risk contravening section 62 of the SIS Act.

The asset must be maintained and managed in a way that serves the fund's retirement purpose. Trustees must ensure the property is insured, rental income is banked to the fund, loan repayments are made on time, and all transactions are recorded and disclosed in the SMSF annual return.

Where an SMSF holds property under an LRBA, the arrangement must remain compliant with sections 67A and 67B of the SIS Act throughout the life of the loan. LRBA amounts are disregarded when calculating a member's total superannuation balance for Division 296 tax purposes, but the loan must still be structured correctly and maintained on arm's length terms.

Using super to buy investment property through an SMSF offers control, tax advantages, and the ability to build a diversified asset base, but requires careful structuring and ongoing compliance. If your circumstances or the fund's investment strategy change, seek advice from a licensed SMSF specialist before acting.

Call one of our team or book an appointment at a time that works for you to discuss how an SMSF property loan can support your retirement planning and whether a warehouse acquisition aligns with your fund's investment strategy.

Frequently Asked Questions