There are various important decisions a business owner will make about their premises. For example, whether to rent or buy, where to base the business and even the style of the property.
If you are a business owner with an SMSF, there is an additional option to consider and that is – 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 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.
Unlock your super
It can free up capital for you as the business owner and unlock your super so it can do more for you.
Another benefit to purchasing commercial property through your SMSF is that the property is protected against insolvency. So, depending on the type of business you have, this can be particularly appealing to you as a business owner.
There’s a tremendous level of protection of assets within super which ticks the asset protection box for a lot of SMEs that may be subject to litigation due to the nature of what they do.
The tax benefits
Then there are the tax benefits.
During the accumulation phase, income tax is only $0.15 in the dollar. In retirement, as the law stands, it is zero. This means that the money accumulated in an SMSF through the investment does not get taxed.
Beware of the responsibilities
On the flip side of the shiny self-management coin, 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.
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.
Having an SMSF means you can’t give all of this work to someone else to do for you, but you can seek advice. We are an accredited finance broker that has completed specialist SMSF lending and commercial property finance training, giving us the expertise to form an integral part of your advice and consultation team.