Purchasing a commercial property can be a smart long-term investment—whether it’s for your own business premises, a retail asset, or part of a diversified portfolio. But unlike residential property, commercial transactions carry complex legal and financial risks that are easy to overlook without expert advice.
From lease structures to GST implications and hidden repair liabilities, understanding the fine print can make a significant difference to the return on your investment—and your peace of mind.
- Know What You’re Really Buying
Commercial properties are typically sold with an existing lease in place. While this can offer immediate rental income, it also means you’re buying into an existing legal relationship between landlord and tenant.
Before signing a contract, it’s essential to review:
- The current lease agreement (including expiry date, options and rent review mechanisms)
- Outgoings and who is responsible for paying them
- Whether the tenant is compliant with their obligations
- Any incentives, rent-free periods or unregistered side agreements
Failure to understand these details can result in unexpected costs—or worse, a dispute soon after settlement.
- GST, CGT and Stamp Duty Considerations
Tax is one of the most commonly misunderstood aspects of commercial property transactions. GST may apply to the purchase depending on whether the sale is treated as a “going concern,” and incorrect assumptions can lead to shortfalls at settlement.
Capital Gains Tax (CGT) and land tax also need to be considered, especially for investors purchasing through trusts, companies or SMSFs. The legal structure you choose can affect your exposure to tax, as well as asset protection and future resale options.
Getting legal and accounting advice early—before contracts are signed—can help you structure the transaction in a way that supports your long-term goals.
- Beware of Repair and Make Good Obligations
A well-maintained commercial building might seem like a safe bet—but you need to look beneath the surface. Many leases include clauses that make the landlord responsible for major capital works such as:
- Roof repairs
- Air conditioning systems
- Fire safety compliance
- Structural defects
Even worse, if the lease contains an onerous “make good” clause, the landlord (or incoming buyer) may be on the hook for reinstating parts of the property at the end of the tenancy.
A proper building and lease review—ideally by a lawyer experienced in commercial property—can help uncover these potential liabilities before they become your problem.
- Due Diligence Shouldn’t Be Rushed
Unlike residential purchases, commercial property transactions often include a due diligence period. This gives you time to:
- Review the lease and title documents
- Investigate zoning and planning restrictions
- Assess building compliance
- Confirm serviceability for your intended use
Some buyers, particularly in a competitive market, are tempted to waive due diligence to secure a deal quickly. But without this safety net, you’re assuming significant legal and financial risk.
At Perspective Law, we guide our clients through tailored due diligence checklists to ensure all the right questions are asked—before it’s too late.
- Ownership Structures Matter
How you hold your commercial property can affect your tax outcomes, asset protection and succession planning. Options may include:
- Personal ownership
- Family trusts
- Unit trusts
- Companies
- Self-managed super funds (SMSFs)
Each has pros and cons, depending on whether you plan to occupy the premises, lease it out, or pass it to the next generation.
A key part of your legal advice should involve aligning your property purchase with your broader financial and estate planning strategy.
Need assistance with your commercial property purchase?
Buying commercial property can be a powerful way to build long-term wealth—but it’s not without its traps. The right legal advice can protect your investment and help you navigate the transaction with confidence.
At Perspective Law, we assist business owners and investors across Queensland and Australia with tailored, practical advice on commercial property transactions. If you’re planning a purchase, we’d be glad to help.
Call our team now on 07 3839 7555 or contact us to start your conversation today.