Some of the most important decisions a business owner will make are about their premises: whether to rent or buy, where to base the business and even the style of the property are important to get right. For those with an
SMSF, there is one more option to consider: landing business premises and an investment property at the same time.
Figuring out whether buying your commercial premises through your self-managed super fund (SMSF) is an option that’s suitable for you is imperative to the success of your investment.
There can be many gains through purchasing commercial property through your SMSF, including creating a certain level of freedom by smart use of resources.
“It frees up capital for the business owner. They are unlocking super to do more for them,” explains Justin Said, Director Fortuna Wealth.
Further to this, the property is protected against insolvency. Depending on the type of business, this can be particularly appealing.
“There’s a tremendous level of protection of assets within super, so it ticks the asset protection box for a lot of SMEs that may be subject to litigation due to the nature of what they do,” commented Khurram Jivani, Director CAAA.
Then there are the tax benefits.
“While it is in accumulation phase, income tax is only $0.15 in the dollar. In retirement, as the law stands, its zero,” the SMSF specialist says. This means that the money accumulated in an SMSF through the investment does not get taxed.
On the flip side of the shiny self-management coin, the SMSF specialist offers a word of warning regarding obligation. “There is an absolute element of responsibility on compliance matters. You are the trustee of an SMSF and you need to understand what those responsibilities entail,” the SMSF specialist warns.
You must pay commercial rates for rent through a prearranged lease agreement and, although having a protected asset is great for some businesses, it also means that equity is locked within the fund. You can’t take earnings elsewhere.
To the extent applicable the above general information we have provided you is purely factual in nature and does not take account of your personal objectives, situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial and/or product advice. Similarly, any tax, superannuation or self-managed superannuation fund advice we have provided is factual and not financial andf/or product advice as defined by the Corporations Act. It should be noted that taxation is only one of the matters that you need to consider when making a decision on a financial product. If you require personal or financial product advice you should consult an appropriately licensed or authorised financial advisor.
Commercial Associates Accountants and Advisors Pty Ltd A.C.N 117 062 183 and its subsidiaries are not licensed to provide financial product advice.