Can you use a SMSF to buy commercial property?
SMSFs are also permitted to purchase commercial property as long as it meets the sole purpose of providing retirement finances to its fund members. Unlike residential properties, you can lease SMSF commercial property to your own business or a company related to your members, but the rent must be paid at the market value. Due to this opportunity for related usage and other benefits, it’s a much more popular option for SMSF managers.
The loan criteria for SMSF commercial property investments are stricter than conventional lending and have a smaller loan to value ratios, but the benefits spread beyond loan potency, including:
Regular cash flow from commercial tenants
Low volatility which generally
makes it safer than share options
Longer leases compared
to residential contracts
Potential for capital growth
if market value and property value grows
Reduced tax when your SMSF
is in the pension phase
The opportunity to run your
own business in the property and pay rent into their retirement fund instead of an external landlord