Figuring out whether buying your commercial premises through your self managed super fund (SMSF) is an option that’s suitable for you is imperative to the success of your investment.

There can be many gains made by purchasing commercial property through your SMSF, including creating a certain level of freedom by intelligent use of resources.

It essentially frees up capital for the business owner. They are unlocking super to do more for them.

Further to this, property within the SMSF can be protected against insolvency. Depending on the type of business, this can be particularly appealing.

There’s a tremendous level of protection of assets within super, so it ticks the asset protection box for many small to medium-sized businesses that may be subject to litigation due to the nature of what they do. If this is important to you, I suggest talking to an SMSF specialist lawyer for advice.

Then there are the tax benefits. Your investment earnings (such as interest, dividends, rental income etc.) in superannuation are generally taxed at 15%, while you’re working and growing your super. 

On the flip side of the shiny self-management coin, I offer a word of warning regarding obligations. 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 and should seek advice. As with all things related to SMSF and superannuation, there are strict rules and guidelines. Therefore, it is vital to speak with your SMSF specialist broker, accountant, and financial planner when you embark on any changes within your fund.

As an MFAA Accredited Finance Specialist, I have completed specialist SMSF Lending and Commercial Property finance training, giving me the expertise to form an integral part of your SMSF Advice team. Please reach out if you would like a review of your SMSF loan or a referral to an SMSF advice professional in my network.