Make Business Property Acquisitions Extra Profitable Using Your SMSF

You could be reaping substantial tax and wealth-creation benefits by purchasing or transferring existing property through a self-managed super fund.

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Why you should purchase commercial property through super

SMSFs have skyrocketed in popularity among business owners. Here’s why: Not only can they add wealth to your retirement nest egg but they also let you manage commercial property effectively.

Six reasons to buy your business premises through your super

By purchasing a commercial property owned by you personally, a family company or trust, through an SMSF, you can unlock cash that’s tied-up in your business. Use this cash instead for reinvestments back into your business, to help finance other personal assets, or to reduce your non-tax-deductible home loan debt.

You can pass your business property down to future generations with minimal fuss and little to no tax consequences while, at the same time, keeping that property out of reach from future-generation family breakdowns, creditors, and lawsuits.

Assets in SMSFs are protected from bankruptcies and lawsuits. Should you or your business face litigation or should your business file for bankruptcy, your business property will be insulated from creditors – including the Australian Taxation Office.

If you own your business premises through your super fund, you can lease it to your business – and the rent you pay to your SMSF is generally a business tax deduction as are all other expenses including interest, depreciation rates, and insurance. Just imagine the savings!

If you don’t have enough money to buy your business premises outright, your SMSF could borrow the shortfall from a bank. All your fund will need is the correct structure and enough savings to pay for a 30 percent deposit plus costs.

 

  • Rental income will be subject to a maximum 15 percent tax rate as opposed to company and marginal tax rates that range from 28.5 to 49 percent.
  • If you sell your property before you start drawing a pension and your SMSF has owned the property for more than 12 months, you’ll only pay a maximum capital gains tax rate of 10 percent.
  • You can use negative gearing benefits to completely eliminate your fund contributions and income tax.
  • If you buy and hold your business premises through your super and sell when you start drawing a pension, that property will be exempt from capital gains tax – saving you hundreds of thousands of dollars in taxes.
  •  Any rental income you receive while you draw a pension will also be tax-free revenue.

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Contact RNO Financial accountant to discuss your personal financial and business goals, and how we can help you reach them.