Buying Commercial Property Using Your Super

In addition to the standard processes of buying a commercial property as outlined in Considerations before Purchasing a Commercial Property additional requirements for purchasing using your super include,

1.       Setup. Setting up your self managed superfund (SMSF). Liaise with your accountant to assist you with this. You may also require independent financial advice from a qualified financial advisor. If you plan on borrowing for the purchase, ensure your SMSF has a corporate trustee.

2.       Transfer. Transfer funds into you SMSF. Once your SMSF is established, you’ll need to arrange for your existing superannuation pooled funds to be transferred across to your SMSF bank account. These funds can be used as the deposit for the purchase.

3.       Finance. Understand how much you can borrow in your SMSF. Talk to your broker to understand how much you can borrow in your SMSF. At the bare minimum, your broker will take account of, the deposit funds you have available for the purchase, historical and projected member contributions, projected rental income, earnings from any other assets in the fund.

4.       Bare trust. If you plan on borrowing, setup the bare trust and trustee. In addition to the SMSF, you’ll need to setup another company and bare trust which holds the property on behalf of the SMSF.

5.       Contract: Ensure your solicitor reviews the contract before you sign it. Depending on which state you are purchasing and whether you are using borrowed funds, will determine the entity name on the contract. It will be critical that you have a finance date plus other special conditions such as due diligence before entering into a contract.

If you are interested in investing in commercial property, either as a pure investment or for your business to occupy, simply email us at [email protected] and we’ll be in touch.

Just remember, this is not intended to be financial advice and any comments or opinions are general in nature. We recommend you seek independent legal, taxation and financial advice before making a significant investment decision.