Commercial Property Deposit and Costs: What You Actually Need

I will not quote you a percentage, because there isn't an honest one. Commercial deposits move with the property type, the lease, the borrower and the lender's appetite that month. What I can tell you is the shape of it: you should be planning for a significantly larger deposit than a residential purchase, and the deposit is only part of the cash you need at settlement.

What actually drives the deposit

• The property type. Generic industrial, retail and office space attracts more lender appetite than specialised buildings with a narrow pool of future buyers.
• The lease. A long lease to a strong tenant supports both the valuation and the lender's comfort. A short or shaky lease does the opposite.
• Owner-occupier or investment. If your own business is the tenant, some lenders take a more generous view. Others do not distinguish.
• Location. Metropolitan and well-established industrial areas are treated differently to regional or single-industry towns.
• Your security position. Adding other property as security can change the deposit needed on the purchase itself.

GST: the one that catches people

Unlike residential, commercial property sales are commonly subject to GST. If GST applies, you generally need to fund it at settlement and then claim it back through your next BAS. That is a timing gap, and it can be a big one. People plan the deposit perfectly and then discover they need to carry the GST for weeks before it comes back.

There are situations where GST works differently, including going concern treatment where a property is sold with the lease in place, and the margin scheme. Which applies depends on the contract, the vendor and your registration position. This is squarely your accountant and solicitor's territory, and it needs to be checked before you exchange, not after. Get the contract reviewed on this point specifically.

The rest of the settlement costs

• Stamp duty. Payable on commercial purchases, and without the concessions first home buyers get on residential. It is usually the largest single cost after the deposit.
• Legal fees. Higher than a residential conveyance, because commercial contracts, leases and loan documents genuinely need reviewing.
• Valuation. You pay for a full commercial valuation, and it costs meaningfully more than a residential one because it is a detailed income-based report.
• Lender fees. Application or establishment fees, and often ongoing line or facility fees and annual review fees. These differ from residential and vary widely.
• Due diligence reports. Building reports, and for industrial sites often environmental or contamination reports. A contamination issue can stop a deal outright.
• Adjustments at settlement. Council and water rates, land tax and outgoings are apportioned between you and the vendor.

Costs that start after settlement

Land tax deserves its own mention, because commercial property has no principal place of residence exemption and holdings are usually aggregated across what you own. If you already hold investment property, adding a commercial asset can push you into a different bracket entirely. Ask your accountant to model it before you buy rather than discovering it on the assessment.

Then there are outgoings. Depending on the lease, you or the tenant will carry council and water rates, insurance, strata levies, land tax and repairs. Who pays what is set by the lease, which is why the lease type matters to your actual return and not just to the lender.

The honest summary is that a commercial purchase needs more cash than people expect, and the surprises are usually GST timing and a valuation that lands under the contract price. Both are manageable if you know about them early. For the wider picture of how these loans work, read commercial versus home loans, or see commercial property loans. This is general information and not tax or credit advice, so confirm the numbers with your accountant for your own situation.