Self-Managed Superannuation Funds can be used to purchase commercial property, including commercial property already owned by the individual. The RMB Lawyers’ Property Law Division explains some of the benefits:
People who have a Self-Managed Superannuation Fund (SMSF) have a wide range of commercial property types that they can purchase to provide income for their retirement savings.
Examples of commercial property that can be purchased through your SMSF includes office space, warehouses, shops and other retail outlets such as showrooms, or even a farm.
So long as the property is used exclusively for business purposes and meets the ‘sole purpose’ test of providing retirement benefits to the members of the SMSF, then the commercial property can be eligible.
You can even lease your commercial property to your own business.
The commercial property held by your SMSF can be leased to your own business at a fair market value. This means that your business will essentially be paying its lease expenses into your SMSF, where this rent income can benefit from the SMSF’s concessional income tax rates. At the same time, your business can also claim this rent as a business expense.
The property can also be leased to external businesses.
If you already own commercial property, you can acquire it with your SMSF.
Your SMSF can acquire commercial property that you already own, so long as the property is purchased by the SMSF at fair market value. These types of property transfers also benefit from a concessional stamp duty rate of $750.
If your superfund does not have 100 percent of the required cash for the purchase, part of the transfer can also come as a contribution to the SMSF. However, careful planning is required to assess capital gains implications and not exceed contribution caps.
And, importantly, you can obtain a loan to assist with the purchase.
A limited recourse borrowing arrangement (LBRA) may be used to allow the superannuation fund to borrow funds for the purchase from a third-party lender. This involves establishing a separate bare trust that isolates the property away from other investments, so that the other SMSF assets are protected if the loan goes bad.
RMB’s experienced Property Division can assist with all aspects of conveyancing, leasing, stamp duty concessions and bare trusts for your SMSF.
You can contact our office by phone on Freecall 1800 681 211 for a consultation, or use our 'Ask a Question' tool on our website.