Commercial property

Business real estate and SMSF: the secret weapon in the back pocket of the entrepreneur

Promoted by Blue Crane Capital

As the SMSF sector continues to grow year over year, commercial and residential properties are attractive to SMSF trustees for a variety of reasons.

The main fundamental advantage of SMSF loans is that they allow a borrower to invest directly in residential or commercial property using the funds accumulated in their Super.

There are also lucrative tax advantages: Interest and borrowing costs are generally tax deductible, significantly reducing retirement tax payable within the fund.

Investing in commercial real estate with your SMSF

Commercial real estate is not as strictly regulated as residential real estate, which makes it an attractive addition to your SMSF investment strategy.

Commercial properties within SMSFs can be owner-occupied (unlike residential SMSFs). That’s what we call ‘real estate business‘ that is to say the land and buildings used entirely and exclusively by your company. If your SMSF owns your professional building, then your company pays rent directly to your SMSF. However, this must be at the market rate (usually appraised and issued by the lender’s appraiser).

Owning full ownership/premises of the business enterprise within the SMSF creates great benefits and incentives, such as the ability for SMSF directors to make “cash” contributions. This means that a member can transfer their existing ownership (whether held in personal name or in a trust structure) of an asset to their SMSF.

If your (freehold) business premises are held in an SMSF, they are subject to asset protection, which means that the asset is protected against future claims or liabilities that may arise from the operation of your business. Essentially, if the business enterprise ceases operations due to insolvency, bankruptcy, or other enforceable action, business ownership cannot be claimed.

Refinance your existing SMSF loan

Refinancing your SMSF loan – similar to refinancing any other loan – also offers significant opportunities by lowering your applicable interest rate and accessing product terms of up to 30 years. No withdrawals are allowed, which means the loan must be dollar for dollar, for example, an SMSF loan of $500,000, refinanced at another institution, results in a new borrowing maximum of $500,000. When it comes to refinancing, many lenders have strict requirements, so contact your broker if you want to check your current rate.

Check your rate with SMSFr8

Get an idea of ​​what your SMSF loan rate could be by using SMSFr8. Answer a few simple questions about your scenario and receive a non-binding estimate on the higher rate for commercial or residential properties.

SMSFr8 can help you start the SMSF loan journey or be a sounding board for your existing SMSF rate.

How Blue Crane Capital can help you get an SMSF loan

At Blue Crane Capital, with our team’s experience in commercial banking, we understand commercial real estate financing better than anyone.

Whether it’s homeownership or investment, for buying and refinancing in SMSF, we’ve been recognized as the industry leaders in arranging SMSF home loans for the past five last years.

We recently helped one of our clients purchase a commercial investment property within their SMSF. They had accumulated approximately $750,000 in cash and liquid assets as part of their retirement pension. We were able to help them secure a loan of $735,000 through a non-bank lender with an interest rate of 3.90% per annum.

If you would like to learn more about using your SMSF as an investment vehicle, contact the Blue Crane team today..

Business real estate and SMSF: the secret weapon in the back pocket of the entrepreneur

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Last update: May 17, 2022

Posted: May 17, 2022