Smart Ways to Use Your SMSF to Purchase a Warehouse

Commercial property remains one of the few pathways for borrowing through your Self-Managed Super Fund following the 2026 residential ban.

Oncology pharmacists building long-term wealth through super can still use a Limited Recourse Borrowing Arrangement to acquire a warehouse, provided the property satisfies the business real property definition under section 66 of the SIS Act. The recent legislative change that prevents new SMSF loans for residential property does not extend to commercial holdings, but the structural requirements around how these arrangements work remain strict and non-negotiable.

Why Warehouses Still Qualify for SMSF Borrowing

Commercial property used wholly and exclusively in one or more businesses meets the business real property definition and remains eligible for purchase through a Limited Recourse Borrowing Arrangement. A warehouse leased to a third-party logistics company, storage provider, or manufacturing tenant fits within this definition because its use is commercial rather than residential. The business does not need to be operated by your fund, but the property itself must be used for business purposes at the time your SMSF acquires it.

Consider an oncology pharmacist with a $900,000 super balance who identifies a small industrial warehouse leased to a medical equipment distributor on a five-year term. The property generates rental income that flows to the fund, and because it qualifies as business real property, the acquisition can be financed through an LRBA without breaching the 2026 residential ban. The asset is held in a bare trust structure, and if the loan defaults, only the warehouse is at risk, not other fund assets.

How the Bare Trust and Limited Recourse Structure Works

Under an LRBA, the warehouse is held in a separate holding trust, often called a bare trust. Your SMSF acquires a beneficial interest in the property and gains legal ownership once the loan is repaid. If you default, the lender's recourse is limited to the asset held in trust. This structure protects the rest of your super balance from creditor claims, which is why the arrangement is described as limited recourse.

The borrowed funds must be used to acquire a single asset. You cannot purchase multiple warehouses under one LRBA unless they are on the same title and identifiable as a single asset. Stamp duty and loan establishment costs can be covered by the borrowed amount, but you cannot use the loan to make capital improvements after settlement. Any renovation or structural work must be funded from existing super contributions or rental income generated by the property.

SMSF Loan Deposit and LVR Requirements

Most lenders offering SMSF loans for pharmacists require a deposit between 30 and 40 percent of the property value for commercial acquisitions. The maximum loan-to-value ratio for warehouse purchases typically sits at 70 percent, though some lenders will only lend up to 60 percent depending on the property's location, lease terms, and tenant profile. A shorter lease or a single tenant with limited trading history may reduce the amount a lender is willing to advance.

Rental income from the property is taxed at the super fund rate of 15 percent during accumulation phase or zero percent if the fund is in pension phase. However, if your total superannuation balance exceeds $3 million at the end of the financial year, Division 296 tax applies to earnings above that threshold. This additional 15 percent tax affects the portion of your balance over the large super balance threshold, and if your balance exceeds $10 million, a further 10 percent applies above that level.

Related Party Leasing and In-House Asset Rules

You can lease the warehouse to a related party, such as a pharmacy business you own or a company you control, provided the lease is on arm's length terms at market value. Business real property leased to a related party is specifically excluded from the in-house asset rules, which otherwise limit related party investments to 5 percent of fund assets. This exclusion makes commercial property particularly useful for pharmacists who own or operate their own businesses and want to hold the premises within super.

Any lease must reflect what an independent tenant would pay under similar terms. The ATO publishes safe harbour interest rates for SMSF loans under Practical Compliance Guideline PCG 2016/5, and similar principles apply to rental arrangements. Income from a lease that does not meet arm's length terms may be assessed as non-arm's length income and taxed at the highest marginal rate, currently 47 percent including the Medicare levy.

Refinancing an Existing SMSF Commercial Loan

Refinancing a commercial LRBA does not trigger the residential ban because the underlying asset remains business real property. The refinanced loan must relate to the same warehouse acquired under the original arrangement, maintain the limited recourse character, and meet arm's length terms consistent with the ATO's guidance. You cannot refinance into a larger loan to fund improvements or acquire additional property. The original single asset requirement continues to apply.

In practice, refinancing an SMSF commercial loan involves setting up a new bare trust arrangement with the incoming lender and transferring the beneficial interest from the old trust to the new one. Your fund repays the original lender from the proceeds of the new loan, and the warehouse continues to generate rental income. If you are considering home loan refinancing for pharmacists or looking at your super arrangements at the same time, it may be worth reviewing both structures in parallel to confirm your overall borrowing capacity remains appropriate.

Sole Purpose Test and Personal Use Restrictions

Your SMSF must be maintained for the sole purpose of providing retirement benefits to members. You cannot use the warehouse for personal storage, conduct private business from the premises without a formal lease, or allow a related party to occupy the property rent-free. Even short-term breaches can result in significant penalties, and the fund may lose its complying status, triggering a tax rate of 47 percent on all income and capital gains.

These restrictions apply whether the property was acquired with borrowed funds or existing super assets. The business real property exemption allows acquisition from and leasing to related parties, but it does not override the sole purpose test. Every transaction involving the warehouse must be conducted on commercial terms and documented accordingly.

Contribution Limits and Funding the Deposit

The concessional contributions cap is $32,500 per annum, and the non-concessional contributions cap is $130,000 per annum. If your total superannuation balance was below $1.84 million on 30 June of the previous financial year, you may access the bring-forward arrangement, allowing up to $390,000 in non-concessional contributions over three years. This can be useful for building a deposit if your existing balance is not sufficient to meet the lender's LVR requirements.

Where your balance exceeds $2.1 million, the non-concessional contributions cap is nil, and you can only contribute via concessional channels. This limitation affects oncology pharmacists in senior roles or those with established super balances who want to acquire additional property through their fund. In these situations, rental income from an existing investment property or other fund assets may need to accumulate over several years before a commercial acquisition becomes possible.

When to Seek SMSF Specialist Advice

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, and the provision prohibiting residential LRBAs commenced 45 days later. As at early July 2026, the ATO had not published updated guidance on all aspects of the new law, particularly around refinancing and circumstances that might end an existing arrangement. Any SMSF property acquisition should be reviewed by a licensed SMSF specialist before contracts are exchanged, not after settlement.

If you are weighing up whether a warehouse purchase fits within your fund's investment strategy, or if the numbers around deposit size, rental yield, and loan serviceability are not yet clear, call one of our team or book an appointment at a time that works for you.

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