Attention small business owners: Have you considered buying a commercial property via your SMSF?

Marty McDonald - Monday, March 12, 2018

Currently we have a lender offering rates from 5.80% P&I over 20 years for commercial properties bought through your Self-managed super fund, usually commercial property loans for SMSF are more likely to be around 8% pa.

For a small business owner there are some potentially serious advantages in owning a commercial property in your SMSF. The typical scenario we see this working well is where a business is renting commercial property already, the business is fairly well established, and the proprietors have at least $200,000 in super assets. 

To recap a SMSF is a special type of trust that people can set up to manage their own superannuation. Like a normal super fund, your employer contributions still get paid into the fund and you can still make additional contributions as you see fit. Unlike a normal super fund, the trustee (normally you in your capacity as director of the trustee company) has direct control over the assets that your superannuation is invested in

So what’s the advantages of buying commercial property within your SMSF?

  1. When the SMSF eventually sells the property, there is no capital gains tax (if the fund is in retirement phase). Or if not yet in retirement phase the rate of capital gains tax is only 15%.
  2. Rent paid by the business doesn’t change but instead of going to a third party it goes directly to your SMSF who uses these funds to pays down the related SMSF loan.

In a nut shell after 15-20 years the loan would be paid out. The SMSF would own the property outright and be able to sell it and thus transfer the net proceeds to a more liquid assets all CGT free…Or hold and rent to someone else.

Forced savings with tax advantages to boot!

Are there any risks?

Of course. Seek your own legal and financial advice before seriously considering.

If you interested in discussing this further, please contact me. 


About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on  and LinkedIn.
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