Buying Your Business Premises From Your Landlord: What Changes
Property Lending Hub
Sitting tenant · Entity choice · GST · Commercial finance
Your landlord has offered to sell you the building your business already occupies. The first decision is not the price. It is who will buy the property, because the tenant itself buying and a separate property-holding entity buying are different transactions for the lease, GST and finance. Then the valuation, due diligence, contract conditions and cash needed to settle decide whether the deal actually works.
Quick Answer
Yes. The first question is who will own the property. If the existing tenant entity buys the freehold, the lease normally merges and ATO GSTR 2002/5 says the landlord cannot supply its leasing enterprise as a going concern to that lessee. If a separate entity buys and the lease genuinely continues, the tax and finance analysis changes. Before signing, test the price, due diligence, finance condition, GST, duty and cash needed at settlement.
Also called: buying the premises you lease, sitting tenant purchase, buying business premises from your landlord, tenant buying the freehold.
What changes when the seller is your landlord?
Nine things need to be re-checked when the seller is your landlord, and the biggest one is who will actually take title. You already occupy the building, so the lease, rent, valuation evidence, fit out and settlement process interact in ways they do not on a normal investment purchase.
The decision of whether to own at all is not on this page, because your landlord has already made the offer. If you are still weighing it, read buying versus leasing your business premises instead. What follows assumes the offer is live and you are working out what it actually involves.
| What changes | Buying from your landlord as the sitting tenant | Buying another commercial property |
|---|---|---|
| The lease | If the tenant entity itself buys, the lease normally ends by merger. If a separate property entity buys, the lease can remain or be replaced. | A third-party lease normally continues and transfers with the property. |
| Rental income for servicing | If the tenant buys, rent disappears and the lender assesses the trading business. A related-party lease under a separate owner does not automatically become lease-doc income. | Third-party rent can often be assessed as property income, subject to lender policy. |
| GST going concern treatment | Where the existing lessee itself buys, ATO GSTR 2002/5 paragraph 108 is directly against a leasing-enterprise going concern. A separate purchasing entity with the lease genuinely continuing is a different analysis. | A genuinely tenanted building may qualify if all section 38-325 conditions are met. |
| The valuation | There was often no market campaign, so a privately agreed price has less external bidding evidence behind it. | An open campaign may provide additional market evidence, although the lender still relies on its valuation. |
| Stamp duty | State or territory duty rules still apply. GST treatment and non-arm's-length pricing can affect the dutiable value analysis. | The same jurisdictional duty rules apply. |
| Land tax and owner outgoings | They move to whichever entity takes title, except to the extent an ongoing lease allocates outgoings back to the trading business. | They become costs of the owner, subject to the lease and jurisdiction. |
| Leasehold improvements | You may be negotiating a price that captures fit out or works your own business funded. | The buyer is less likely to have funded improvements before owning the property. |
| Anti-money-laundering checks | No agent does not automatically make the landlord a reporting entity. The solicitor or conveyancer helping execute the transfer may separately provide a regulated professional service. | The selling agent and professional advisers may each have obligations depending on the services they provide. |
| The contract timetable | Lease rights, a private negotiation and a finance window can all run at once. | The timetable is usually driven by the sale campaign and contract terms rather than an existing landlord-tenant relationship. |
Generic questions about deposit size, loan to value ratios and how commercial rates are set are answered in full on how commercial property loans work. This page stays on the things that are different because you are already the tenant.
From our broking, indicative
Landlord to tenant deals fail for a small and repeatable set of reasons, and almost none of them are about whether the business is a good business. What usually needs to be resolved first is below.
- The valuation lands under the privately negotiated price
- Where the tenant entity buys, there is no lease income left to assess once the lease merges
- ABN or financials seasoning is shorter than the file needs
- The deposit is sitting inside the business rather than in the bank
- Related-party pricing has no market value substantiation behind it
- Fit out value is counted twice, once when the tenant funded it and again in the purchase price
Where the tenant entity itself buys and the lease merges, the rent you were paying comes out of the trading result and the new loan repayment goes in its place. Where a separate owner buys, the lease and rent can continue, but the lender still needs to understand the related-party structure rather than treating the rent as automatically independent property income.
Indicative only, drawn from deals we have placed, as at 18 August 2026. This is a description of what commonly goes wrong, not a quote, not an offer, and not a statement of approval likelihood. No rates, costs or approval times are given here by design. Actual outcomes depend on lender policy and your circumstances at the time of application. General information only, not financial advice.
What should you do first when your landlord offers to sell?
Read the lease first, choose the buyer second, test the property and price third, then make the contract and finance timetable match. The expensive mistakes on this transaction are usually sequencing mistakes, because the entity, GST treatment, due diligence and finance protection all need attention before the deal becomes unconditional.
The offer often arrives in conversation, which makes it feel less formal than an advertised sale. That is precisely why people jump to price before they have worked out what they are actually buying and how they will fund it.
The order this transaction should run in
Nothing in that list is exotic. What is unusual is that a landlord-to-tenant deal can feel settled before the real work has started because the parties already know each other. Treat familiarity as a reason to document the deal more carefully, not less.
What happens if you do not buy and your landlord sells to somebody else?
A sale does not automatically cancel a binding commercial lease, but whether the new owner is bound by every lease right depends on the lease, registration, term, state or territory land-title law and any retail-leasing legislation that applies. Do not assume that saying no means you must move out, and do not assume an unregistered lease is equally protected everywhere in Australia.
A registered lease is visible on title and is ordinarily dealt with as an existing interest in the sale. Short or unregistered leases are more jurisdiction-specific. For example, Queensland's Land Title Act 1994 section 185 preserves the interest of a lessee under a short lease as an exception to indefeasibility, while New South Wales Real Property Act 1900 section 42(1)(d) protects certain tenancies of no more than three years where the incoming registered proprietor had the relevant notice. Other jurisdictions use different wording and rules.
| Question | What to check | Why it matters |
|---|---|---|
| Can I stay? | Whether the lease is registered, its remaining term and options, and the state or territory rules protecting the lease | The sale itself is not the same thing as a valid termination, but the enforceability of an unregistered interest can be state-specific. |
| Does my rent change? | The rent-review provisions already in the lease and whether any variation is being requested as part of the sale | A new owner does not get a free-standing right to rewrite a binding lease merely because title changed. |
| What happens to my option? | Whether the option is registered or protected, the exact exercise mechanics and whether the sale contract acknowledges it | An option can be economically more important than the current lease term, and protection of unregistered future rights is not uniform. |
| What happens to my bank guarantee or cash bond? | The lease's transfer mechanics, sale settlement adjustments and what the outgoing and incoming landlords are documenting | The security should not disappear into the ownership change or be duplicated without explanation. |
| What happens to make-good and incentives? | Outstanding landlord works, incentive balances, fit-out contributions and make-good clauses | These can become disputes if the sale contract and lease records do not identify who inherits the obligation. |
| Do I have a first right to buy? | Any option to purchase, right of first refusal, first offer or matching right in the lease or side deed | The wording can control whether the landlord must offer, notify or let you match before selling to the third party. |
Legal position is jurisdiction-specific. Examples: Land Title Act 1994 (Qld) ss 184-185 and Real Property Act 1900 (NSW) s 42(1)(d), checked 18 August 2026. They illustrate why an unregistered or short lease cannot be answered with one Australia-wide rule. Have a commercial property solicitor check the title, lease and applicable retail-leasing law in the property's jurisdiction.
This is also why the lease should be reviewed before you treat the landlord's offer as a now-or-never decision. The real comparison may be buy now versus remain tenant under an enforceable lease, not buy now versus immediately lose the premises.
If the landlord has already received another offer, take any first-refusal, matching or purchase-option deadline to your solicitor immediately. The earlier section on what to check in the lease explains the documents to pull together.
What should you check in your lease first?
Start with any option to purchase or right of first refusal, then read the make-good, outgoings, security and improvement clauses before you negotiate a price. Those clauses can change the timetable, the value you are giving up and the money that should move back to you at settlement.
What an option or first-refusal clause means legally is a question for a solicitor. The finance consequence is usually timing. A matching window attached to a third-party offer runs on the other side's clock, not on a lender's clock, so valuation, formal approval, legal review and the deposit may have to run in parallel.
Then read the clauses people normally ignore while the lease is running: who owns the fit out, who must remove it, whether the landlord owes any outstanding works, how the security deposit or bank guarantee is released, whether the lease is registered, and which outgoings are already being passed through to you. Those items feed the price and the settlement checklist.
Take the lease to a commercial property solicitor before you respond to the offer in writing. Not after.
Should the tenant itself buy the property, or should a separate entity own it?
Choose the buying entity before you agree the deal, because it changes whether the lease survives, whether a going concern is possible, how the loan is serviced and whether rent continues after settlement.
This is the fork that sits underneath almost every other answer on this page. The same building can be owner-occupied in one structure and landlord-and-tenant property in another. A trading company, a separate company or trust, and an SMSF are not interchangeable purchasers, and changing the buyer after the contract is signed can create legal, tax, duty and finance consequences.
| Question | Existing tenant entity buys | Separate property entity buys and business remains tenant |
|---|---|---|
| What happens to the lease? | The lease normally merges because the same entity holds the leasehold and freehold interests. | The existing lease may continue, or the parties may put a replacement lease in place. |
| Can the sale be a GST-free going concern? | Usually not for a pure leasing enterprise. GSTR 2002/5 paragraph 108 says the owner cannot supply that leasing enterprise as a going concern to the lessee. | Potentially, if the leasing enterprise and covenants genuinely continue and all section 38-325 conditions are met. GSTR 2002/5 Example 21 illustrates a separate related property entity receiving the building with a lease intact. |
| What services the loan? | The trading business, because there is no rent paid to an external owner after settlement. | The lender still looks through the related-party structure and may assess the trading business as the economic source of rent. |
| Does a separate lease create a lease-doc loan? | No third-party lease remains. | Not automatically. Lease-doc policies commonly rely on arm's-length third-party rent, so a related-party lease can still lead to a full-doc or low-doc assessment. |
| Does rent continue? | No internal rent to a separate property owner is needed. | Yes, normally under a documented commercial lease, with the tax and GST treatment set for the owning entity. |
| What must be decided before drafting? | The owner-occupier finance path, GST treatment and settlement treatment of the existing lease. | The purchaser, lease terms, GST registration position, market rent and whether the proposed structure has a genuine commercial basis. |
Basis: Australian Taxation Office, GSTR 2002/5, paragraph 108 and Example 21 at paragraphs 135 to 136, read 18 August 2026. The finance rows are indicative Switchboard Finance broking observations, not lender policy and not a statement that any structure will qualify for a particular product. General information only. Entity choice is a legal and tax decision to make with a commercial property solicitor and registered tax agent before the contract is drafted.
What tax questions change with the buying entity?
The buyer changes future tax outcomes as well as today's GST treatment. Four questions from the fan-out deserve to be asked before the contract names the purchaser: whether the owner can ever access the general CGT discount, whether the property may qualify as an active asset for the small-business CGT concessions, how rent affects a property company's base-rate-entity position, and how cash is legally moved from the trading company to a different purchasing entity.
- General CGT discount: companies are not eligible for the general CGT discount. Eligible individuals and trusts can potentially access the 50 per cent discount after the relevant holding period, subject to the rules applying to the actual taxpayer.
- Small-business CGT concessions: the ATO says property owned outside the trading entity can still be an active asset where it is used in the business of a connected entity, subject to the active-asset test and the other Division 152 conditions. A normal unrelated rental property is different.
- Company tax rate: if a company owns the property and derives rent, rent is base-rate-entity passive income. The lower company tax rate therefore cannot be assumed merely because the wider group runs an active business.
- Moving the deposit: if retained cash belongs to a private trading company but a shareholder, trust or other associate is buying, a payment or loan can raise Division 7A issues. Structure the movement with the registered tax agent before the money leaves the company.
Basis: ATO guidance on the CGT discount; ATO small-business CGT concession guidance on passively held assets used by connected entities; Income Tax Rates Act 1986 ss 23AA-23AB; and ATO Division 7A guidance on loans to shareholders and associates. Read 18 August 2026. These rules are highly structure-specific. This page identifies the questions only; obtain registered tax advice before choosing the buyer.
A separate entity is not automatically better, and the tenant itself buying is not automatically simpler. The point is to make the choice deliberately before the contract locks the parties in. If an SMSF is being considered, the separate rules after 10 August 2026 are covered later on this page and on SMSF commercial property loans.
How do you know if your landlord's asking price is fair?
Separate the property's market value from the extra strategic value the premises may have to your particular business. The landlord's off-market asking price, your willingness to avoid moving and the lender's market valuation are three different numbers and should not be treated as interchangeable.
The Australian Property Institute defines market value around an arm's-length exchange between a willing buyer and willing seller after proper marketing, with knowledgeable and prudent parties acting without compulsion. Its current valuation protocol says valuers should maximise observable market evidence and commonly use comparable sales, market rent and income-based analysis for real property. That is a different exercise from asking what this exact site is worth to you because your plant is bolted down, your customers know the location or relocation would stop production.
| Number | What belongs in it | What not to confuse it with |
|---|---|---|
| Independent market value | Comparable sales, market rent, yields, property condition, use, title and other market evidence assessed by a qualified valuer | The landlord's asking price or the amount your business can afford to borrow |
| Your business-specific value | Avoided relocation costs, downtime, replacement fit-out, lost production, customer-location value and the cost of making good the old lease | Market value merely because those savings are real to you |
| Landlord's deal economics | Avoided campaign and agent costs, vacancy risk, reletting risk, lease expiry, incentives on a new lease and certainty of a direct settlement | An automatic discount owed to the tenant |
| Lender valuation | The valuer's market-based assessment under the lender's instructions and security requirements | A promise that the lender will advance the agreed percentage of the contract price |
| Your walk-away price | Market evidence plus the business value you deliberately choose to pay for continuity, less the risks and costs you are taking on as owner | Whatever price is needed to make the negotiation finish |
Valuation basis: Australian Property Institute, Valuation Protocol: Valuation Approaches and Methods, using the 2025 IVS framework, read 18 August 2026. Business-specific and landlord-specific items are negotiation economics, not an API valuation method and not a statement that a valuer or lender will add or deduct them dollar-for-dollar.
A useful negotiation starts with an independent commercial valuation or strong external market evidence, then separately quantifies the costs you avoid by staying. If the landlord asks for more than market evidence supports, you can then decide whether the extra amount is genuinely worth paying to your business rather than pretending the premium itself proves the building is worth more.
Also separate tenant-funded improvements from the underlying property value. If your business paid for a fit-out or works that the landlord now points to when justifying the price, read whether you are paying twice for improvements you funded before settling the number.
The lender will still perform its own valuation. The later section on what happens when the lender values below the agreed price deals with the funding consequence.
Do you still need due diligence if you have leased the property for years?
Yes. Knowing how the premises works for your business does not tell you whether the title, zoning, approvals, building systems or environmental history are clean enough to own. A long-term tenant knows the day-to-day building better than most buyers, but that familiarity can create the biggest blind spot in the transaction.
A lender's valuation is not a substitute for due diligence. It answers a value and security question for the lender. It does not certify that your fit out was approved, that the fire systems are compliant, that there is no contamination risk, or that an access arrangement you have used for ten years is actually protected on title.
| What feels known as the tenant | What the buyer still needs to verify | Why it can change the deal |
|---|---|---|
| "We have always operated this business here" | Current zoning, overlays, permitted use, planning approvals and building approvals for the use and alterations | An existing use does not by itself prove every alteration or future use is approved. |
| "The fit out has been here for years" | Permits, occupancy documentation, fire safety requirements and who legally owns the fixtures | You can inherit compliance work or pay for improvements your business already funded. |
| "The building works fine" | Structure, roof, electrical, hydraulic, mechanical and fire systems, asbestos or other hazardous-material records, and likely capital works | Repairs that were the landlord's problem become the owner's problem after settlement. |
| "We have always used that driveway or car park" | Title, easements, licences, access rights, common-property rights and any encumbrances | Practical use and legally protected use are not the same thing. |
| "I know what the outgoings are" | Council rates, owner insurance, land tax position, maintenance contracts, arrears and future capex | The owner's cost base is wider than the outgoings your lease happened to pass through. |
| "The landlord has never mentioned contamination" | Historic uses, environmental registers and the level of environmental assessment appropriate to the site | Industrial and specialist sites can carry liabilities that are invisible from daily occupation. |
Basis: Business Victoria, Buy a business premises, on zoning, planning and building permits and property inspection; Property Council of Australia, Due Diligence on Buying a Commercial Property Investment, on title, building systems, fire safety, hazardous materials, environmental and future-capex checks. Both read 18 August 2026. The exact investigations depend on the property, industry and state. General information only, not legal, planning, building or environmental advice.
Have your solicitor set the legal due diligence scope and use the right technical specialists for the property. If the lender's valuation later comes in clean, treat that as a finance result, not as a clean bill of health for the building. If the due diligence identifies substantial works you want funded with the acquisition, the construction loan pack shows the information a lender will usually need to assess works funding.
Can you sign the contract before your commercial property finance is approved?
You can, but signing without a finance condition that matches the loan you actually need can leave you committed to settle even if approval is delayed or the valuation creates a shortfall. A private landlord sale is exactly where people are tempted to sign first because there is no agent or campaign forcing a formal process.
There is no single Australia-wide finance clause that automatically protects every commercial buyer. The wording and contract practice vary by jurisdiction and deal. The lesson from property contract cases is simpler: the amount, approval date, required steps and notice mechanics matter, and missing a deadline can leave the contract on foot.
Questions to put to your solicitor before you sign
Basis: Legal Practitioners' Liability Committee, Subject to finance requires strict compliance, read 18 August 2026. Its worked contract examples are Victorian and should not be treated as a national form clause; the broader lesson is that the actual wording and deadlines control. Have a commercial property solicitor advise on your contract in your state or territory.
Do not confuse an indicative approval or a conversation with a credit officer with formal approval on the property and structure you are actually buying. If you are already under contract, read what happens when the commercial valuation comes in under the contract price.
Does a commercial property loan have the same consumer protections as a home loan?
Usually not where the credit is predominantly for business purposes. ASIC explains that the National Credit Act applies to credit predominantly for personal, domestic or household purposes, so business-purpose commercial property finance generally sits outside that consumer regime.
That matters because consumer default-notice and dispute protections should not be assumed to carry across. ASIC also notes that a lender providing only commercial loans is not required merely for that reason to hold an Australian credit licence or be an AFCA member. The practical step is to understand the contract and check the dispute pathway of the lender you are considering rather than assuming it matches a home loan.
Basis: ASIC Information Sheet 101, FAQs: Does the credit legislation apply?, and ASIC Information Sheet 207, Disputes about commercial loans. Both read 18 August 2026. General information only, not legal advice.
What happens to your lease at settlement?
If the existing tenant entity itself acquires the freehold, the lease normally ends by merger at settlement. If a different entity buys and the business remains tenant, the lease may continue or be replaced.
Where the tenant itself buys, the leasehold and freehold interests come into the same hands, so the legal and title mechanics need to be dealt with at settlement. If the lease is registered, have your solicitor confirm the surrender, withdrawal or other dealing required in your jurisdiction rather than assuming it disappears from the register by itself.
Where a separate company, trust or fund takes title, the lease question is different. The parties need to decide whether the existing lease is continuing, being varied or being replaced, and the answer then feeds the GST going-concern analysis, the rent, outgoings and the lender's assessment.
Your solicitor should also settle what happens to any bank guarantee, cash security deposit, incentive balance, make-good obligation and registered dealings connected with the old lease. Those are settlement items, not paperwork to discover after the title has changed.
See leasehold and freehold for the two interests that merge where the tenant itself becomes the owner.
Can you use a lease doc loan to buy your own premises?
Usually not for an owner-occupied or related-party structure, because lease-doc lending relies on rent that the lender accepts as independent property income. If the tenant itself buys, the rent disappears. If a related property entity buys, the lease may legally continue but the related-party rent does not automatically become lease-doc servicing.
A lease doc commercial property loan is built around the lease, tenant covenant, term and rent. A sitting-tenant purchase usually moves the assessment back to the trading business, either through full financials or an alternative-documentation path, because that business is still the economic source of the property payment.
| What you are checking | Lease doc | Full doc | Low doc |
|---|---|---|---|
| What services the loan | Accepted lease income from a tenant structure the lender treats as independent | The trading business, from financial statements and tax records | The trading business, from alternative evidence accepted by the lender |
| Fit for a sitting-tenant purchase | Usually not where the purchaser is the tenant or the rent is related-party | A common owner-occupier route, subject to lender policy | Potentially available where the lender accepts alternative evidence |
| What you have to produce | The lease, tenant covenant and property information | Financial statements, tax returns and supporting business information | The alternative income evidence required by that lender |
| If the tenant entity buys | There is no external rent after the lease merges | Owner-occupied, assessed on the business | Owner-occupied, assessed on the business |
| If a separate related entity buys | The lease may survive, but related-party rent may still fail the product's arm's-length requirements | The lender can assess the trading business and related ownership structure together | The lender can assess alternative business evidence and the related structure |
| Where the old rent goes | Only relevant if accepted lease income remains | If the tenant itself buys, the old rent expense stops and can be considered in the business cash flow | Same economic change, subject to the evidence the lender accepts |
Finance treatment is indicative as at 18 August 2026. Lease-doc eligibility varies by lender and lease structure. A related-party lease is not assumed to be arm's-length income. No rate, LVR, fee or approval outcome is stated or implied. General information only.
There is a genuine upside in the owner-occupied route. If the tenant entity buys, the rent it used to pay disappears from the trading result and the new loan repayment takes its place. A lender can consider that change when assessing the business. The generic deposit and loan-to-value questions are answered on how commercial property loans work.
Is the sale to a sitting tenant a GST-free going concern?
Usually not where the existing tenant entity itself is the purchaser. ATO GSTR 2002/5 paragraph 108 says a landlord whose enterprise consists solely of leasing the property cannot supply that leasing enterprise as a going concern to the lessee.
That is the cleanest rule on this page because it deals with the exact relationship in question. For a going concern to be GST-free, the statutory conditions in section 38-325 also have to be met, including consideration, the purchaser's GST registration position and written agreement that the supply is of a going concern.
If the current tenant itself buys, paragraph 108 is the problem: the lease cannot keep operating between the same legal entity as landlord and tenant. If a separate property-holding entity buys and the business remains tenant under a genuine lease, the analysis changes because the lease covenants can continue to exist between separate legal entities.
Basis: Australian Taxation Office, GSTR 2002/5, paragraph 108 and Example 21 at paragraphs 135 to 136; ATO, Selling a going concern. Both read 18 August 2026. General information only, not tax advice.
The practical instruction is to decide the purchaser before the contract is drafted, then have a registered tax agent test the actual supply. A newly formed property entity also needs its GST registration position dealt with in time if the going-concern conditions require it. Do not arrange the finance on an assumed GST-free settlement and hope the contract can be fixed later.
If it is not a going concern, what does the GST actually cost you?
If the purchase is a taxable supply and your buyer is entitled to a full input tax credit, the GST can be a settlement funding gap rather than a permanent acquisition cost. The important word is can: entitlement and timing depend on the buyer, the use of the property and the GST attribution rules.
A GST-registered purchaser making a creditable acquisition can generally claim the available input tax credit through its activity statement. The tax period is not safely described as "your next BAS" in every case. It depends on whether the entity accounts on a cash or non-cash basis, when consideration is provided or an invoice is issued, and whether the required tax invoice is held when the BAS is lodged.
That creates two finance questions. First, how much GST has to be funded at settlement before any credit is realised? Second, how long does the business have to carry that funding without damaging the working capital the lender is relying on?
The duty question is separate but connected. Where the relevant jurisdiction includes GST in the dutiable consideration or value, the GST component can also enlarge the duty base, and that duty is not recovered as an input tax credit. The state-by-state position is dealt with below, and the transaction-level timing is also covered in commercial property stamp duty and the settlement window.
Basis: ATO, GST and property, on GST credits; ATO, GSTR 2000/29, on attribution of input tax credits for cash and non-cash accounting and the tax-invoice requirement. Both read 18 August 2026. General information only, not tax advice.
There is also a different property regime that should not be confused with this one. Purchaser GST withholding at settlement applies to specified residential property supplies, not an ordinary commercial property purchase. If it is raised on your deal, have your tax agent and solicitor check why.
Basis: ATO, GST at settlement, read 18 August 2026. General information only, not tax advice.
Can you use the margin scheme instead?
The margin scheme may be available if the sale is eligible and the seller and purchaser agree in writing before settlement. It is not an election the buyer can make alone. If the going-concern concession is unavailable, this is a question to raise while the contract is being drafted, not after the funding gap has appeared.
Under the general consideration method, GST is worked out on the margin between the seller's acquisition amount and the later sale price rather than simply applying the full-rate calculation to the whole sale price. Other calculation rules can apply depending on when and how the seller acquired the property, so the landlord's acquisition history matters.
The written agreement is critical. The ATO says the parties must agree in writing to use the margin scheme before the settlement date. Eligibility also matters: not every taxable property sale can use the scheme.
Basis: ATO, GST and the margin scheme and GST at settlement. Both read 18 August 2026. Eligibility and calculation method depend on the seller's acquisition history. General information only, not tax advice.
The trade-off is important: if the margin scheme is applied to the purchase, the purchaser cannot claim a GST credit for GST included in the purchase price. So a lower GST amount at settlement is not the same thing as an ordinary taxable purchase where an input tax credit may later be available. Model both outcomes with your registered tax agent before you choose the funding structure.
Using the margin scheme also does not mean the duty question disappears. The dutiable value rules still have to be applied in the state or territory where the property is located. See commercial property stamp duty and the settlement window for the finance-side timing.
Do you pay stamp duty on commercial premises in your state?
In most of Australia yes, but not everywhere, and the split is structural rather than a matter of rates. South Australia has abolished duty on qualifying commercial land. The Australian Capital Territory exempts commercial transfers below a threshold. Victoria charges duty once and then replaces it with an annual tax. The other five jurisdictions charge conventional transfer duty with no commercial carve out.
Before the map, the correction that matters most on this page.
GST and duty are not separate costs
Duty is calculated on the GST-inclusive price. Revenue NSW ruling DUT 045 sets out the circumstances in which the Chief Commissioner may accept that the GST component is nil, and it names the case where land is sold subject to a lease, or an agreement for lease, as a GST-free going concern. The Queensland Revenue Office puts the same arithmetic the other way around: where a contract requires the transferee to pay the stated consideration plus an amount for GST, the dutiable value is the greater of the consideration plus that separate GST component, or the unencumbered value.
Read those two together and the consequence for a sitting tenant is sharp. If your sale does not qualify as a GST-free going concern, the GST added to the price sits inside the duty base. Losing the concession therefore costs you twice: once as the funding gap described above, and once as duty charged on that gap, which never comes back.
Basis: Revenue NSW, Revenue Ruling DUT 045 version 2, Market value and GST, issued and effective 20 January 2020; Queensland Revenue Office, Public Ruling DA011.1.1, Transfer duty on dutiable transactions subject to GST. Both read 18 August 2026. General information only, not tax or legal advice, refer to a registered tax agent.
| Jurisdiction | Position on commercial transfer duty | What the position turns on |
|---|---|---|
| South Australia | No commercial duty at all | Duty was abolished on qualifying land: no liability arises on a conveyance or transfer of an interest in non-residential and non-primary production land executed on or after 1 July 2018. It does not rescue a transfer arising from a contract of sale or other transaction entered into before that date. |
| Australian Capital Territory | Duty free below a commercial threshold | The commercial threshold rose from $2 million to $2.1 million from 1 July 2026. No duty applies up to $2,100,000. Above it, a flat rate of $5.00 per $100 applies to the total transaction value, not just the excess. |
| Victoria | Paid once, then replaced by an annual tax | For an entry transaction with contract and settlement on or after 1 July 2024, stamp duty is payable one final time. A 10 year transition runs from settlement, after which the commercial and industrial property tax applies at a flat 1 per cent of unimproved land value each year, with no tax-free threshold. |
| New South Wales | Conventional scale, no commercial carve out | Dutiable property expressly includes commercial or industrial property. The structural point worth knowing is that the premium rate applies to residential properties only, so a commercial transfer does not reach that tier. |
| Queensland | Conventional | The Duties Act 2001 (Qld) section 10 "What is dutiable property" provides that each of the following is dutiable property, (a) land in Queensland. The rate concessions sit in Chapter 2 Part 9 "Concessions for homes", which does not reach commercial premises. |
| Western Australia | General rate applies as the residual | The general rate applies to a dutiable transaction unless the Duties Act provides otherwise. The concessional rate reaches a principal place of residence or a Western Australian business asset only where the value of the entire property does not exceed $200,000. |
| Tasmania | One sliding scale | The Duties Act 2001 (Tas) section 9 "What is dutiable property?" provides that dutiable property is any of the following, (a) land in Tasmania. The published concession list contains nothing commercial. |
| Northern Territory | Payable, and the reform is widely misread | From 9 May 2023, stamp duty on the conveyance of non-land property, except for goods conveyed with an interest in land, is abolished. That covers business assets. It does not cover commercial land, which remains fully dutiable. |
| Land tax, every jurisdiction | Becomes an annual owner cost you did not carry as a tenant | Thresholds, aggregation rules and exemptions differ by state and by the entity that takes title, so the same building can produce a different annual bill depending on who buys it. |
Basis: RevenueSA; ACT Revenue Office; Victorian Department of Treasury and Finance; Revenue NSW; Duties Act 2001 (Qld); Government of Western Australia; Duties Act 2001 (Tas); Northern Territory Revenue Office. All read 18 August 2026. Positions only. Rate schedules are deliberately not published because they change too often to carry on an evergreen page. General information only, not tax or legal advice, refer to a registered tax agent.
Two things are deliberately absent from that table. No duty timing range is published, because the range circulating in AI answers is not verified per jurisdiction and the timetable is the thing you cannot afford to get wrong. And no Victorian regional commercial concession is published, because its current status could not be confirmed against a primary source at the time of writing. For the settlement window question specifically, see commercial property stamp duty and the settlement window.
What happens to your land tax once you own it?
Land tax becomes your annual bill once you own the premises, and it is a cost you did not carry as a tenant unless your lease already passed it through as an outgoing. Whether you pay anything at all depends on the state, on the aggregated land value of everything the buying entity already holds, and on which entity takes title, because a self managed super fund, a family trust and a trading company are not treated identically. The row in the table above records the national position. Get the number for your own state and your own entity from a registered tax agent before you model the holding cost, because it recurs every year and it compounds across the life of the loan.
What happens if your landlord does not have a clearance certificate?
If your landlord does not give you a valid clearance certificate at or before settlement, you have to withhold part of the purchase price and pay it to the ATO instead of to your landlord. This is the item on the page most likely to be missed entirely on a landlord to tenant deal, and it is the one that moves money on settlement day.
Foreign resident capital gains withholding applies to all real property sales unless the vendor is an Australian resident for tax purposes holding a valid clearance certificate, given to the purchaser at or before settlement. Without that certificate the purchaser must withhold from the sale proceeds and pay the amount to the ATO at or before settlement. For contracts entered into on or after 1 January 2025 the rate is 15 per cent and the previous threshold no longer applies, which means it now reaches every relevant sale rather than only larger ones. A great deal of older material online still refers to that threshold, and relying on it is how people get caught.
The name of the rule is the reason it gets ignored. Your landlord is almost certainly an Australian resident, so nobody expects a foreign resident rule to matter. It matters because the obligation is triggered by the absence of the certificate, not by the residency itself. On an ordinary sale the agent chases the vendor for it as a matter of routine. On an agent free landlord to tenant sale there is no agent, and the certificate is the sort of thing two parties who know each other assume the other has dealt with.
| The step | Who does it | What happens if it is missed |
|---|---|---|
| Applying for the certificate | Your landlord, as vendor, applies to the ATO | Nothing happens until settlement approaches, which is why it is left late |
| Giving it to you | Your landlord, at or before settlement | You are obliged to withhold, whatever you both intended |
| Withholding and remitting | You, as purchaser, pay the amount to the ATO at or before settlement | The obligation is yours, so the exposure for getting it wrong is yours too |
| Where the price is not arm's length | You, as purchaser, obtain a separate expert valuation from a professional valuer | Withholding is worked out on market value rather than the agreed price |
| Recovering the money | Your landlord, through their own tax return | Your landlord waits for a return to be lodged and processed |
That fourth row is the one that bites on this transaction specifically. Where the sale price has been negotiated at non-arm's length, for example because the vendor and purchaser are related, the purchaser must obtain a separate expert valuation from a professional valuer, and the withholding is worked out on market value rather than on the number the two of you agreed. A landlord who is a family trust or a parent turns that from a theoretical row into a step with a cost and a lead time attached, and it sits alongside everything in the related party section further down.
Basis: ATO, Foreign resident capital gains withholding overview and Australian residents and clearance certificates. Both read 18 August 2026. Rate and threshold apply to contracts entered into on or after 1 January 2025. General information only, not tax advice, and whether an exemption or variation applies to your contract is a question for a registered tax agent.
The withheld amount is not an extra purchase cost on top of the agreed price. It redirects part of the amount that would otherwise be paid to the vendor to the ATO. The practical finance issue is settlement coordination: your solicitor and lender need to know the payment directions and certificate position early so the lender's settlement funds are disbursed correctly. If the buying entity has foreign ownership, foreign investment approval is a separate question for your solicitor.
What if the lender values the property below the price you agreed?
A lower valuation can turn part of the agreed price into extra cash you have to find, because the lender may size the loan against a lower accepted property value rather than the price you negotiated privately. This risk is sharper on a landlord-to-tenant deal because there may have been no open market campaign testing the price.
How valuations work generally is covered on how commercial property loans work. What is specific here is the order of events. Two parties who already know each other can agree a number first and only discover later that the lender's valuer sees the market differently.
A valuation shortfall is not automatically fatal, but it changes the transaction. Depending on lender policy and the contract, the levers can include contributing more cash, renegotiating the price, testing comparable evidence, changing lender or structure, or deciding not to proceed while a valid contract condition still allows that. Once the contract is unconditional, the buyer's options are much narrower.
Reduce the risk by grounding the price in external evidence, ordering the valuation as early as the lender allows, and making the finance condition account for the actual loan amount you need. Read what happens when a commercial valuation is under contract price before signing.
Are you paying your landlord for improvements you funded?
You can end up paying your landlord for improvements your own business funded, and almost nobody checks. If your business paid for the fit out, the racking, the cool room, the consulting rooms or the office build, and that work has since become part of the building, then a valuation of the premises may be capturing value you already paid for once. Buying at that price pays for it a second time.
This is an ownership question before it is a price question, and it is genuinely a matter for your solicitor, because the answer sits in your lease and in the law of fixtures rather than in a rule of thumb. What follows is the finance-side view of how the argument usually breaks.
| What you are checking | Points toward it already being yours | Points toward it being in the price |
|---|---|---|
| Who funded the work | Your business paid for it directly and holds the invoices | The landlord funded it, or funded it through a rent-free incentive |
| What the lease says | The lease treats the work as tenant's fixtures you may remove | The lease says improvements pass to the landlord on completion |
| The make-good obligation | You are obliged to remove it and reinstate at the end of the term | No make-good obligation, because the landlord kept the benefit |
| How it is treated in your accounts | Capitalised and depreciated by your business as leasehold improvements | Never appeared in your accounts at all |
| What the valuer is instructed to value | The premises excluding tenant's fixtures, stated in the instruction | The premises as improved, with no carve-out |
| What happens on settlement | The make-good obligation is extinguished, which has value to you | You acquire improvements you funded, at a price that reflects them |
Basis: Switchboard Finance broking practice, as at 18 August 2026. Structural comparison only. Whether particular works are tenant's fixtures or have become part of the land is a legal question determined by your lease and the general law, and it is not answered here. General information only, not legal advice. Refer to a commercial property solicitor before you rely on any position in this table.
Two practical moves come out of it. Instruct the valuer explicitly about what is and is not to be valued, because a valuer given no instruction will value the building as it stands. And put the make-good position on the table as part of the price conversation, since the obligation you are about to extinguish is worth something to you and costs your landlord nothing to give up. See leasehold improvements for the underlying concept and the landlord incentive gap for how incentives distort the picture.
What can you claim once you own the premises instead of renting them?
The rent deduction stops and a different set of deductions starts, so the change is one of shape rather than a straight loss. Rent paid on business premises is deductible to the tenant, and that line disappears from your profit and loss the day you settle. What replaces it is interest on the borrowing, a capital works deduction on the building, and depreciation on the plant and equipment inside it.
The capital works side is the part most owner occupiers underclaim, because it is invisible unless somebody goes looking for it. Construction costs for a building, and for alterations and improvements to a leased building including shop fitouts and leasehold improvements, are capital works. Deduction rates of 2.5 per cent or 4 per cent apply to the construction costs, depending on when construction began, the type of capital works and the manner of use, so the rate is a question about your particular building rather than a single national number. The land itself cannot be written off.
The practical obstacle is that you will rarely know what the original construction cost, because your landlord built it or bought it decades ago. Where actual construction costs cannot be determined, an estimate from a quantity surveyor or other independent qualified person can be used instead, which is exactly what a tax depreciation schedule is for. That schedule also splits the purchase price between the building and the plant and equipment, which matters because the two are deducted under different rules and at different speeds.
| The item | While you were the tenant | Once you own the premises |
|---|---|---|
| Rent on the premises | Deductible to the business | No longer exists, unless a separate entity owns the building and charges the trading company rent |
| Interest on borrowings | No purchase borrowing to speak of | Generally deductible where the borrowing relates to the income producing use, confirm the position for your entity |
| The building itself | Not yours to claim | Capital works deduction on the construction expenditure, at the rate that applies to that building |
| Fit out you funded | Capital works on your own leasehold improvements | The entitlement position changes once you own the building the improvements sit in, so confirm it rather than assuming it carries across |
| Plant and equipment | Depreciated in the ordinary way | Depreciated in the ordinary way, with the purchase price apportioned between building and plant |
| The land | Not applicable | Not deductible, and its cost is not written off |
Basis: ATO, Capital works deductions, on eligible capital works, the 2.5 per cent and 4 per cent rates and the use of a quantity surveyor estimate; ATO, Leasing and renting commercial premises, on the deductibility of rent to a tenant. Both read 18 August 2026. Rates and entitlement depend on construction dates, the type of works and how the property is used. General information only, not tax advice, refer to a registered tax agent.
Two of those rows are worth taking to your accountant before you settle rather than at the next tax time. The leasehold improvements row interacts with the price negotiation covered above, because the same fit out cannot sensibly be argued as already yours in the negotiation and treated as newly acquired afterwards. And the split between building and plant is set by the schedule, not by the contract, so getting the schedule done early gives your broker a real after tax holding cost to work with instead of an estimate.
Can you lease the building back to your own business?
Yes, and where the buying entity is not the trading company, a written lease at a market rent is the normal end state rather than an optional extra. If a trust or a fund takes title and your company keeps trading from the building, the occupation needs to be documented, and the rent needs to be a market rent supported by evidence rather than a number chosen for convenience.
Where a self managed super fund is the owner, this stops being good practice and becomes a compliance obligation. Section 109 of the Superannuation Industry (Supervision) Act 1993 requires a fund's investments to be made and maintained on an arm's length basis, and the risk runs in both directions. Rent set below market shifts value out of the fund and into the business. Rent set above market shifts value the other way, and the non-arm's-length income rules sit on that side. Neither is a judgement call to make on your own, and the evidence for whatever rent is set should be obtained at the start and refreshed, not assembled after a question is asked.
There is an administrative consequence that surprises people. A fund must register for GST where its GST turnover reaches $75,000 or more, and most funds never approach that because their income is input taxed and input taxed sales do not count toward GST turnover. Commercial rent is different. Once a fund is registered, or required to be registered, it is liable for GST on the rent it charges on commercial premises, which means activity statements, GST on the rent your own company pays, and GST credits on the fund's related costs. Model that before you decide the fund is the buyer, not after the first rent invoice.
Basis: Superannuation Industry (Supervision) Act 1993, section 109, heading confirmed against the Federal Register of Legislation; ATO, SMSFs, GST and financial supplies, on the $75,000 registration threshold and the exclusion of input taxed sales from GST turnover; ATO, Leasing and renting commercial premises, on GST liability on commercial rent. All read 18 August 2026. General information only, not superannuation, tax or financial advice. Speak to a licensed SMSF adviser and a registered tax agent before setting a rent or choosing an owning entity. Our own SMSF commercial property lending page covers the borrowing side.
The reason this section exists at all is that the leaseback is where the structure either works or quietly stops working. The purchase gets all the attention, the lease gets drafted in the last week, and the rent gets set at whatever the old rent was. That old rent was negotiated between two unrelated parties years ago, which makes it a starting point and not evidence.
Can your SMSF buy the premises after 10 August 2026?
Yes, and after 10 August 2026 business real property is the only real property a self managed super fund can borrow to acquire at all. The rule change narrowed what a fund can borrow against, and it happens to leave the premises your own business occupies as the clearest remaining case.
The date is the whole story here, so start with it rather than with the structure.
That last point is the one worth sitting with. A residential investment leased to a member would be caught by the in-house asset rules. Business real property leased between your fund and your own business is expressly excluded from them, which is precisely why buying your own premises into your own fund is a structure that works where a residential equivalent does not. The enabling legislation is the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received assent on 26 June 2026.
The acquisition rule matters too. A fund cannot generally acquire an asset from a related party, and business real property is one of the limited categories where it can, provided the price reflects market value. If your landlord is connected to you, read that alongside the related party section below.
Basis: ATO, Changes to LRBAs for property from 10 August, page updated 29 July 2026; ATO, Restrictions on SMSF investments, updated 16 September 2025. Both read 18 August 2026. This is a high churn area while the transition is live. General information only, not financial, tax or superannuation advice. Speak to a licensed SMSF adviser and a registered tax agent.
Generic questions about how a fund borrows to buy commercial property are answered on SMSF commercial property loans, and the definitional terms sit at SMSF. Note that material published before 10 August 2026 anywhere on the internet, including on this site, may state the previous position.
What changes if your landlord is a related party?
When your landlord is a related party, the agreed price needs independent market-value support and the structure needs to withstand more scrutiny. The building may be held by a family trust, parents, directors or another entity the same people control. That is not inherently improper, but the evidence around value and terms matters more.
Expect an independent valuation to be more important than in an ordinary arm's-length sale. A lender can require market-value substantiation on a connected transaction, and where an SMSF is buying, section 109 of the Superannuation Industry (Supervision) Act 1993 requires investments to be made and maintained on an arm's-length basis. The related-party acquisition rules and business-real-property exception also need to be checked for the actual parties.
Basis: Superannuation Industry (Supervision) Act 1993, sections 66, 71 and 109, read 18 August 2026. General information only, not superannuation, tax or legal advice. Speak to a licensed SMSF adviser, registered tax agent and solicitor where a fund or related party is involved.
Do not use the private relationship as the evidence for the price. Use an independent valuation and written commercial terms, especially if the same family or control group sits on both sides of the transaction.
Do AML checks still apply when there is no real estate agent?
Possibly, but not because your landlord sold the premises directly. AUSTRAC says an incidental direct sale of business premises is not captured as a real-estate designated service merely because no independent agent is used.
The seller-side real-estate service for an unbrokered sale applies where the sale or transfer is made in the course of carrying on a business selling real estate, such as a property developer. AUSTRAC specifically distinguishes an incidental sale of premises by a business that is not in the business of selling real estate.
Your solicitor or conveyancer is a different question. AUSTRAC's professional-services guidance says assisting a person in planning or executing a transaction to buy, sell or transfer real estate can itself be a designated professional service. So an agent-free landlord-to-tenant sale can still involve AML/CTF customer-due-diligence obligations through the professional advisers acting on the transfer.
The new obligations for newly regulated sectors commenced on 1 July 2026. If your adviser is providing a designated service, expect identity and entity checks and, depending on the risk and circumstances, requests for information supporting the source of funds or source of wealth. A company or trust buyer can therefore require more onboarding evidence than an individual buyer.
Basis: AUSTRAC, Real estate designated services, including its example that incidental business-property sales are not captured merely because they are unbrokered; AUSTRAC, Professional designated services, on professionals assisting to plan or execute a real-estate transaction; AUSTRAC, Enrol now and meet your obligations, on commencement from 1 July 2026. All read 18 August 2026. Which participant is regulated depends on the service actually provided. General information only, not legal advice.
Ask your solicitor or conveyancer at the first meeting what customer-due-diligence information they will need and who else on the transaction has obligations. The practical risk is delay if a trust, company or unusual source of funds is only explained in the final week before settlement.
How much cash do you actually need at settlement?
Your deposit is not your cash-to-complete. You need to fund the purchase contribution plus acquisition costs, any GST timing gap, any valuation shortfall and enough working capital for the business to keep trading after settlement.
This is where a deal that looks affordable on an LVR can still become tight. The loan answers only part of the settlement equation. Duty, GST treatment, legal and valuation costs, lender costs, immediate works and the difference between contract price and lender value can all sit outside the headline loan amount.
| Cash item | Why it belongs in the model | What to confirm before signing |
|---|---|---|
| Purchase contribution | The part of the price not funded by the senior loan | The lender's accepted value and actual approved loan amount, not just a target LVR |
| Transfer duty | Where duty applies, it is an acquisition cost and is not recovered through GST | The state or territory calculation for the actual buyer and transaction |
| GST funding gap | A taxable purchase may require GST to be funded before an available input tax credit is realised | Going-concern position, margin scheme, credit entitlement and attribution timing with the tax agent |
| Valuation shortfall | A lower lender value can reduce the amount the lender is willing to advance | How the lender sizes the loan and what contract protection exists if value is short |
| Legal, valuation and lender costs | Commercial transactions can carry purchaser legal work, lender legal work, valuation and documentation costs | Which costs are payable even if the transaction does not settle |
| Immediate building works | Repairs or compliance items can become yours on day one | Due diligence findings and whether the lender requires any work before or after settlement |
| Working capital retained in the business | Using every available dollar as the property contribution can weaken the same business the lender is assessing | The post-settlement cash buffer, tax obligations and seasonal trading needs |
| Deposit already paid | It is part of the purchase price already contributed, not an extra cost | How it is credited on the settlement statement and whether any contract condition affects its return |
The table is a cash-flow framework, not a quote or lender policy. GST credit timing depends on the ATO attribution rules and the buyer's circumstances. Duty, legal costs and lender costs vary by jurisdiction, adviser, lender and transaction. General information only.
Run that calculation before deciding how much cash can safely come out of the trading business. If there is a genuine funding gap after the senior facility, the separate priority and consent issues for second mortgage lending and private lending need to be considered rather than treated as an automatic top-up.
What if the deposit is in the business, not the bank?
A business can be valuable and profitable without holding the property contribution as spare cash, so the issue is liquidity and structure rather than simply net worth. Stock, plant, receivables and goodwill can support a strong trading business while still leaving a settlement cash gap.
| Potential source | What makes it useful | What needs to be tested |
|---|---|---|
| Cash already held by the trading entity | It is liquid and easy to evidence | Whether using it would strip the working capital the lender is assessing, and whether the buying entity can receive it cleanly |
| Equity in another property | Can release funds without taking trading cash out of the business | Additional security, valuation time, servicing and whether the transaction timetable allows it |
| Retained profits or distributions | Can convert business value into cash available to the buyer | Tax, company, trust and timing consequences with the accountant or tax agent before movement |
| A second-ranking facility | Can address a real gap the senior facility will not fund | Senior-lender consent, priority, combined exposure, exit and total cost |
| Vendor finance or deferred consideration | The landlord may be prepared to leave part of the price outstanding | Whether the senior lender permits it, how it is documented and how tax and duty rules treat the arrangement |
| Price recognition for improvements you funded | Can reduce the agreed price if both sides accept that the tenant already funded value now captured in the building | The lease, ownership of fixtures, valuation instructions and negotiation evidence |
Basis: Switchboard Finance broking practice, as at 18 August 2026. Structural comparison only. No rate, fee, LVR, approval time or approval outcome is stated or implied. Actual assessment depends on the lender, security and parties. General information only, not tax or legal advice.
Do not move retained company cash first and ask the tax question later. If the trading company owns the cash but a different trust, company, shareholder or associate is buying the property, Division 7A can be relevant to payments or loans from the private company. The ATO says loans to shareholders or associates can be treated as dividends unless an exclusion or complying-loan treatment applies. Have the registered tax agent settle the legal path for the funds before the deposit is transferred.
Where a gap remains, the question is what can sit behind or alongside the primary facility without breaking the senior lender's conditions. The consent and priority mechanics are covered on second mortgage versus commercial property loan on premises.
Do not solve the property contribution by emptying the operating account and only then ask whether the business still services the debt. The cash-to-complete and post-settlement working-capital position need to be modelled together.
What changes after settlement?
Settlement changes more than the name on title. The lease position, insurance, property outgoings, tax records and lender reporting all need to move into the new ownership structure immediately.
The day-after-settlement checklist
Business Victoria notes that once you own the premises you take responsibility for costs such as rates and repairs that previously sat with the landlord. The tax and leaseback consequences depend on the entity structure, which is why the buyer decision at the top of this page matters again after settlement, not just before it. See the Property Lending Hub for the next-stage finance guides.
Your landlord's offer looks simple because you already know the building. The transaction is not simple for the same reason. First work out what happens if you do not buy, then decide who would buy if you proceed. If the tenant entity acquires the freehold, the lease normally merges and ATO paragraph 108 makes the leasing-enterprise going-concern route very difficult. If a separate entity buys and the lease genuinely continues, the lease, GST, future tax and finance analysis changes. Before agreeing a price, separate independent market value from the extra strategic value the site has to your business. After that, the deal is decided by property due diligence, contract conditions, lender valuation and the full cash-to-complete rather than the headline price alone.
Key takeaway: work in this order: lease rights and the “do not buy” alternative, buying entity, fair price, property due diligence, contract protection, GST and duty, valuation, finance, cash to settle, then the post-settlement ownership setup.Frequently Asked Questions
Yes. Start by deciding whether buying is better than remaining tenant and, if you proceed, who will buy it. If the existing tenant entity acquires the freehold, the lease normally merges and the lender assesses an owner-occupied structure. If a separate company, trust or fund buys while the business remains tenant, the lease, GST and finance treatment can be different.
A sale does not automatically cancel a binding commercial lease. Whether the incoming owner is bound by every lease right depends on the lease, registration, term, the land-title law in the state or territory and any retail-leasing legislation that applies. Short and unregistered leases are particularly jurisdiction-specific, so have a commercial property solicitor check the title and lease before assuming you must leave.
Decide before the contract is drafted. If the tenant entity buys, the lease normally merges and rent stops. If a separate entity buys, the lease can continue and rent may be paid between the trading business and property owner. That changes the GST, tax and finance analysis. Entity choice should be settled with the solicitor and registered tax agent, not chosen only to fit a loan product.
Separate market value from the extra strategic value of the site to your business. Use an independent commercial valuation or strong comparable market evidence for the property itself, then separately quantify avoided relocation, downtime, replacement fit-out and make-good costs. Those savings can justify a higher personal walk-away price, but they do not automatically increase the lender's market valuation.
If the existing tenant entity buys the freehold, the leasehold and freehold interests normally merge and the lease ends. If a different entity buys and the business remains tenant, the lease may continue or be replaced. Your solicitor should also deal with any registered lease, bank guarantee, cash security deposit, make-good obligation and other lease-linked items at settlement.
Usually not for an owner-occupied or related-party structure. Lease-doc lending relies on rent the lender accepts as independent property income. If the tenant itself buys, rent disappears. If a related property entity buys, the lease may continue but related-party rent does not automatically become lease-doc servicing.
Usually not where the existing tenant entity itself is the purchaser. ATO GSTR 2002/5 paragraph 108 says a landlord whose enterprise consists solely of leasing the property cannot supply that leasing enterprise as a going concern to the lessee. A separate purchasing entity with the lease genuinely continuing is a different fact pattern.
Potentially, if the buyer is GST-registered and the acquisition is creditable. The available input tax credit is claimed through the activity statement system, but timing depends on the GST attribution rules and the buyer's circumstances. A margin-scheme purchase does not give the purchaser a GST credit for GST included in the price.
You can, but the risk depends on the actual contract condition. A finance clause should be reviewed against the loan amount you need, approval date, valuation risk, notice requirements and deposit treatment. Do not assume any approval or generic subject-to-finance wording will protect you if the lender later approves less than you need or a deadline is missed.
A lower valuation can reduce the amount a lender is willing to advance against the property, increasing the cash you need at settlement. Depending on the lender and contract, options can include contributing more cash, renegotiating the price, testing comparable evidence or changing finance structure. Your position is much stronger before the contract becomes unconditional.
Yes. Daily familiarity does not prove that title, easements, zoning, planning approvals, building approvals, fire systems, hazardous-material records or environmental history are clean. A lender valuation is also not a legal, structural or environmental due-diligence report.
No national exemption applies to commercial property. The position is jurisdictional. South Australia has abolished duty on qualifying non-residential land, the ACT has a commercial threshold, Victoria has the commercial and industrial property tax transition, and other jurisdictions retain transfer-duty regimes. Use the current revenue authority rules for the state or territory where the property sits.
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