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SMSF vs personal name: comparing the tax on commercial property

When you buy commercial property, the entity that holds the title decides how the rent and the eventual capital gain are taxed. The same building can produce very different after-tax returns depending on whether you own it in your personal name, through a company or trust, or inside a self-managed super fund (SMSF).

The gap is widest at the top marginal tax rate. Rent taxed at 47% in your own hands is taxed at 15% inside an SMSF in accumulation phase, and can be tax-free once the fund is paying you a retirement pension.

If you are weighing up the numbers, our overview of SMSF commercial property finance sets out how the structure fits together.

How each structure is taxed

Three ownership structures are common for commercial property, and each sits on a different part of the tax scale.

Property held in your personal name

Net rent is added to your other income and taxed at your marginal rate, up to 45% plus the 2% Medicare levy. On sale, individuals who have held the asset for more than 12 months currently receive a 50% capital gains tax (CGT) discount, so half the gain is taxed at your marginal rate.

That discount is changing. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the general 50% discount is being replaced for gains that accrue from 1 July 2027, moving to cost-base indexation with a minimum tax rate. Gains built up before then are broadly preserved.

Property held in a company or trust

A company pays a flat 25% or 30% on net rent, with no CGT discount available to companies. A trust generally distributes income to beneficiaries, who are then taxed at their own marginal rates, so the outcome depends on who receives the distribution.

Property held in your SMSF

Inside an SMSF, net rent is taxed at 15% while the fund is in accumulation phase. A capital gain on an asset held for more than 12 months receives a one-third discount, for an effective rate of 10%. Once a member moves into retirement (pension) phase, income and capital gains on assets supporting that pension can be tax-free, subject to the transfer balance cap of $2.1 million for 2026-27.

A simple worked comparison

The figures below are illustrative and rounded, and they ignore deductions such as interest and depreciation, but they show the scale of the difference on $60,000 of net rent.

  • Personal name, top marginal rate: roughly $28,000 in tax.
  • Company at 30%: $18,000 in tax.
  • SMSF in accumulation phase at 15%: $9,000 in tax.
  • SMSF supporting a retirement pension: nil.

The same pattern repeats on the capital gain when you sell. An asset held for more than 12 months and sold while the fund is in pension phase can be free of CGT, which is difficult to match in any other structure.

The trade-offs to weigh

Lower tax is only one side of the ledger. Holding property in super comes with rules and limits that do not apply when you own it personally.

  • Money in super is preserved. You generally cannot access it until you meet a condition of release, usually around retirement.
  • Getting funds into the SMSF is capped. The concessional contribution cap is $32,500 for 2026-27, which limits how quickly you can build the fund.
  • Large balances face an extra tax. Division 296 applies an additional 15% to earnings on the portion of a total super balance above $3 million from 1 July 2026.
  • Borrowing to buy is now commercial-only for new arrangements. From 10 August 2026, new SMSF borrowing for residential property is banned, while borrowing for business real property is untouched.
  • Compliance costs are higher, including an annual audit and administration.

Frequently Asked Questions (FAQs)

Is an SMSF always more tax-effective than personal ownership?

Not always. The tax rate inside super is lower, but you give up access to the money until retirement and you can only contribute a limited amount each year. For a business owner with a long time horizon, the trade often favours the fund. For someone who needs the rental income now, personal ownership may suit better.

Can I move a property I already own into my SMSF?

Business real property can generally be transferred into an SMSF as an in-specie contribution or sale at market value. This can trigger CGT and stamp duty, though small business CGT concessions and state duty concessions may reduce the cost. It needs planning with your accountant.

What happens to the tax rate when I retire?

Income and gains on assets supporting a retirement pension can be tax-free, within the transfer balance cap. This is one of the main reasons business owners hold their premises in super for the long term.

The Bottom Line

On tax alone, an SMSF is usually the most favourable home for commercial property, with a 15% rate in accumulation, an effective 10% on long-held gains, and the potential for tax-free income in retirement. The catch is access, contribution limits and compliance. For a plain-English look at the strategy business owners use most, see our guide to the rent-to-yourself strategy.

This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, tax, legal or credit advice. SMSF rules are complex and change often. Speak with a licensed financial adviser, your accountant and an SMSF specialist before acting.