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 tax-effectively.
Six reasons to buy your business premises through your super
1. Unlock cash that’s tied-up in your business premises
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.
2. Keep your business premises protected in your family for generations to come
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.
3. Protect your property from 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.
4. Lease your business premises from your SMSF
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!
5. Avoid purchasing property outright
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.
6. Access sizable tax savings and increase your return on investment
- 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.
Learn more about buying or transferring your existing commercial property
to a self-managed super fund.
- Are you doing everything you can to maximise your super?
- Are you familiar with all of your super options
- Could you be missing out on significant tax-saving and wealth-building opportunities?
Contact us today to see how Tax Effective can help you better manage your super.
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