Buying Your Business Premises

Commercial lending is not a bigger home loan

Most business owners approach their first commercial purchase with residential instincts, and almost every one of those instincts is wrong. The deposit is bigger, the loan term is shorter, the valuation is driven by income rather than comparable sales, and GST is in play. None of that makes it a bad idea. It just means the deal needs to be planned differently, and the planning happens before you find the building, not after.

This guide covers what actually decides whether a premises purchase funds, and what it costs you if you get the structure wrong.

The rule that changed on 10 August 2026

If you have ever been told to buy your premises through your self managed super fund, the ground has just moved, and it moved in your favour relative to residential investors.

The change was made by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026. It applies to limited recourse borrowing arrangements entered into on or after 10 August 2026. From that date an LRBA can only be used to acquire real property where the property is business real property at the time the arrangement is entered into, meaning it is wholly and exclusively used in one or more businesses.

The transitional rule is precise and worth reading carefully: the changes do not apply where the fund exchanged a binding contract to acquire the property before 10 August 2026, and that holds even if settlement or the LRBA itself happens afterwards. Existing arrangements are unaffected.

Source: ATO, Changes to LRBAs for property from 10 August, and the Act itself via the Parliament of Australia bill record. Both checked 9 August 2026. Mixed use property, vacant land and anything with a private or residential component needs review before an LRBA is entered into, because not all non residential property qualifies automatically.

The practical read for a business owner: the strategy of holding your own premises in super and leasing them to your own business is one of the few related party arrangements superannuation law permits, and it survived a change that closed the door on residential. It has to be at genuine market rent on arm's length terms, properly documented, and consistent with the fund's investment strategy and the sole purpose test. Structure it with your accountant and an SMSF specialist first. We handle the lending side on our SMSF commercial property loans page.

What a commercial deposit actually looks like

Commercial property lending generally sits at a lower loan to value ratio than residential. Typical ranges run around 65% to 75% for standard commercial property, meaning a deposit of roughly 25% to 35%. Strong owner occupiers buying quality assets can reach 80% in some cases, particularly with a long trading history behind them (indicative market ranges per Rate Challenge and Everstone Finance, checked 9 August 2026; actual LVR depends on the lender, the asset and your position).

Three things move that number:

• Asset type. A standard industrial unit, office or retail shop in a well tenanted area sits at the top of the range. Specialised property with few alternative uses, such as a service station, childcare centre or purpose built facility, sits lower, because the lender is thinking about who else would buy it.
• Owner occupier versus investor. Owner occupiers generally get better terms. Your business trading in the building is a stronger story than a lease from a tenant the lender has never met.
• Other security. Residential property you already own can be used to bridge the deposit gap. This is the most common way business owners buy their first premises without draining working capital, and it needs to be weighed carefully, because it links your home to your business.

How lenders value the building

A residential valuation is mostly comparable sales. A commercial valuation is mostly income. The valuer looks at the rent the property produces or could produce, the length and quality of the lease, the strength of the tenant, and the capitalisation rate for that asset class and location. They will usually also assess a vacant possession value, which is what the property is worth empty.

For an owner occupier this has a consequence people rarely expect: the lender may assess the property on a notional market rent rather than on what your own business actually pays. Your business paying above or below market does not change the valuation, but it does change your serviceability. It is also why the lease structure affects the loan as much as the bricks do.

The shorter term nobody warns you about

Where a residential mortgage commonly runs 30 years, commercial terms are often 10 to 20 years, and many facilities carry a review or refinance point well before the end. Shorter amortisation means a higher repayment for the same borrowing, so the serviceability test is harder to pass than the headline rate suggests.

Plan for the review date from day one. A facility that needs refinancing in three years is fine if you know about it and your business is on a good trajectory. It is a problem if it arrives as a surprise during a soft trading year.

GST, and the going concern exemption

GST is usually payable on a commercial property purchase, which is a very different world to residential. The main exception is the going concern exemption. Where a property is sold with its leases in place, the sale can be GST free, provided the sale is for payment, the purchaser is registered or required to be registered for GST, and the parties agree in writing before settlement that the sale is of a going concern.

The ATO is explicit that the sale of a property by itself is not a going concern. A fully tenanted building sold with all leases, agreements and covenants included can qualify, and so can a partially tenanted building where the vacant part is being actively marketed for lease or is under repair, provided all leases and covenants are included (ATO, Selling a going concern, checked 9 August 2026).

If you are buying vacant premises to occupy yourself, the exemption generally will not apply, and GST needs to be funded at settlement and claimed back afterwards. That gap is real money for a quarter. Some lenders will fund it, many will not. Ask before you assume.

WA transfer duty on commercial property

Commercial property in Western Australia is charged at the general transfer duty rate. There are no first home style concessions and no residential rebates. The general rate scale is progressive and reaches 5.15% on the portion above $725,000, on top of a base amount (rate scale as implemented in our WA stamp duty calculator, sourced from RevenueWA). Duty is payable at settlement from your own funds and generally cannot be added to the loan, so it belongs in the deposit conversation, not the closing costs afterthought.

If you are buying the premises as part of buying a business, note that WA also charges duty on business assets including goodwill. That is covered in our WA business acquisition guide.

Lease or buy: the honest version

Buying is not automatically the right answer, and any broker who tells you it is has not asked enough questions.

• Buying makes sense when you intend to be there a long time, the site is genuinely hard to replace, your fit out is substantial, or your customers come to the location. It converts rent into equity, removes renewal risk, and gives you control over the asset your business sits on.
• Leasing makes sense when capital earns more inside the business than in the property, when you are growing fast enough that you may outgrow the site, or when the location is fungible. A 25% deposit spent on stock, equipment or people can outperform the property comfortably.

The question is not which is better in general. It is which is better for the return your business generates on a dollar of capital, over the horizon you actually plan for.

There is also a third position: owners who already hold their premises and want the capital back without moving. Selling the building and leasing it back releases more than any loan against it can, at the price of the asset and a long rent commitment. The honest version of that trade is in our guide to a sale and leaseback of business premises.

The tax side, briefly

Interest on borrowings to buy income producing commercial property is generally deductible, and capital works deductions under Division 43 can apply to the construction cost of the building at rates of 2.5% or 4% depending on the type of works and when construction began (ATO, Capital works deductions, checked 9 August 2026). Deductions must be based on actual construction costs, or an estimate from a quantity surveyor where the actual cost cannot genuinely be determined. Your accountant works out what applies to your structure. We work alongside them rather than in place of them.

The costs to budget for

• Deposit, typically 25% to 35% unless other security is used
• WA transfer duty at the general rate, payable at settlement
• GST, unless the going concern exemption applies
• Valuation fees, which on commercial property are higher and are usually paid by the borrower
• Legal and conveyancing, with a solicitor who does commercial work
• Building and pest, and for industrial property, contamination and environmental checks
• Lender establishment and facility fees
• Fit out and relocation, plus any downtime while you move
• Outgoings you now carry as owner: council rates, water, land tax, insurance, maintenance

To see the first four of those as numbers on your own purchase, run it through our commercial property loan calculator: deposit, WA duty, GST if it applies, and the repayment at the buffered rate a lender tests.

Where to start

If you are weighing this up, the useful first step is not a property search. It is working out what your business can service and what deposit you can raise without starving the business itself. Our free business finance check takes about two minutes and comes back with a straight answer from people who sat on the lender's side of these deals. If you would rather talk it through, contact us or call or text 0483 292 005.

Related reading: commercial property finance for the lending detail, SMSF commercial property loans if super is part of the plan, and commercial finance for working capital alongside the purchase.

Frequently asked questions

General information only, current at 9 August 2026. It does not take your circumstances into account and it is not tax, legal, superannuation or accounting advice. GST, duty, CGT and SMSF outcomes depend on the specific transaction and structure. Confirm your position with your accountant, your solicitor and an SMSF specialist before you commit.