Stay up to date with the latest COVID-19 news. Learn More

Insights

Your SMSF and Buying Commercial Property

Written by Cem Ozer . August 01, 2022
3 min read

If you’re wondering whether or not you can buy a commercial property in your self-managed superannuation fund (SMSF), you’ve come to the right place! Together, we will work through the most commonly asked questions when considering purchasing commercial property and how that works with your SMSF.

Can I buy a commercial property in my self-managed superannuation fund (SMSF)?

Yes, as long as this type of investment is allowed under your super fund deed and investment strategy.

Can I run my business from the commercial property owned by my SMSF?

Yes, provided that the entity leasing the property from your SMSF does so on commercial terms i.e. Rents are to be paid based on market value and a lease agreement is in place with typical terms and conditions.

Can my SMSF borrow money to fund the purchase of a commercial property?

Provided that it is allowed by your SMSF deed and investment strategy, SMSFs are able to borrow money under a Limited Recourse Borrowing Arrangement, to fund the purchase of a commercial property.

How does a Limited Recourse Borrowing Arrangement work?

A “Bare Trustee” company is established which will be the legal owner of the property, on behalf of the SMSF. It is important that the purchase contract and bare trust deed (for which the trust is also required to be established) are executed correctly, as an error can result in double stamp duty being charged in NSW.

For accounting and tax purposes, the property is treated as being an asset of the SMSF. Legal ownership of the property transfers to the SMSF upon repayment of the Limited Recourse loan.

I currently own a commercial property personally. Can I transfer this to my SMSF?

Commercial properties are considered to be “business real property, which can be transferred from a member to their SMSF.

Your commercial property may be sold to your SMSF (note that it must be sold on commercial terms i.e. at market value) or it may be transferred as an in specie contribution, subject to your contribution caps. As with any transfer of real property, there may be stamp duty and/or capital gains tax implications to be considered.

Summary

A commercial property is a viable investment opportunity for most SMSFs, and owning your business premises in your SMSF can be a great way to build wealth for retirement. As with any investment, you will need to make sure that it is appropriate for your circumstances, and we recommend that you speak to a trusted business adviser prior to entering into a commercial property purchase.

If you would like advice about entering into a commercial property with your SMSF, or any other accounting matters, our team at BLG Business Advisers are available to guide you. Talk with us about your challenges and gain solutions that are specific to your needs.

Written by Cem Ozer . August 01, 2022
Covid-19 Resource Centre

Keep up to date with the Coronavirus.

Covid-Resource-Centre
Access Resource Centre

Are you ready to speak to a business adviser?

Let us show you how we can help.

If you’re more of a talker we’d love to chat, call us on 02 4229 2211

Talk with us

mail (1)

Get business advice that helps you, no matter what stage of business you’re in.

Yes, an email that matters!