How to buy a commercial property and lease it through your SMSF
With an SMSF you can buy the property used by your business to become your own landlord. But how do you ensure you stay on the right side of the tax man?
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Self-managed super funds (SMSFs) are the only type of super fund that is allowed to invest directly in residential and non-residential (commercial/business) property, provided this is consistent with the fund’s investment strategy.
An SMSF borrowing to purchase property must do so via a limited recourse borrowing arrangement (LRBA). The property is then placed in a separate trust and the other assets are protected if the fund subsequently defaults on making the property loan repayments.
When an SMSF sells a property, capital gains tax (CGT) is payable. The capital gain is added to the fund’s assessable income. There is a 33% CGT discount if the property is owned by the fund for longer than a year.
With an SMSF you can buy the property used by your business to become your own landlord. But how do you ensure you stay on the right side of the tax man?
The ability to invest in real property is one of the attractions of SMSFs, but it’s tightly regulated.
Property investment is popular with SMSFs, so it’s important to understand what your fund can and can’t claim as investment property tax deductions.
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