SMSF for Commercial
SMSFs can invest in a wide range of assets, including commercial property. Investing in commercial property through an SMSF can be an attractive option for individuals seeking to diversify their superannuation investments. Provided the investment is done in compliance with relevant regulations, listed below are some of the key advantages
Asset Diversification
Commercial property provides an opportunity to diversify your SMSF's investment portfolio. Diversification helps spread risk and can enhance the overall stability of your superannuation fund. A mix of asset classes, including commercial property, can help mitigate the impact of poor performance in any single sector
Stable Income Stream
Commercial properties often generate stable and regular income through rental payments from tenants. This can be particularly attractive for SMSF members seeking a reliable income stream during retirement. Commercial leases typically have longer terms than residential leases, providing a more predictable cash flow
Capital Growth
Commercial properties may experience capital growth over time, potentially increasing the value of your SMSF's investment. The value of commercial real estate can be influenced by factors such as location, economic conditions, and demand for commercial space. Capital growth can contribute to the overall growth of your superannuation savings
Tax Advantages
MSFs can benefit from certain tax advantages when investing in commercial property. For example, rental income received by the SMSF is generally taxed at the concessional superannuation tax rate, and capital gains made on the sale of the property may be eligible for a discount if the property has been held for at least 12 months.
Control and Flexibility
One of the primary attractions of SMSFs is the level of control and flexibility they offer to members. With an SMSF, you have the ability to make investment decisions, including the selection and management of commercial properties. This can be appealing for individuals who want a hands-on approach to their superannuation investments
Limited Recourse Borrowing Arrangements
SMSFs have the option to use LRBA to borrow money for the purchase of a commercial property. This allows the SMSF to leverage its funds and acquire a property that may be beyond its immediate financial capacity. While this strategy involves risks and requires careful consideration, it can potentially enhance the overall return on investment
