SMSF Buy Business Property

Looking to buy my father business property in SMSF.
The business has not been run for the past 5 years and is not generating any income.
I want to get the business up and running again which could take a while fixing machinery and getting new clients.
If I purchased the property in SMSF is it mandatory for the business to pay rent to the SMSF or can this be delayed until the business is generating income again?

Thanks.

 

The trustee has ab obligation to get market value rent, and would be in breach of the SIS Act and trust law for not doing so.

 

If the property is also owned by your father,
I don’t think the purchase is allowed as you are buying from a related party.

 

Commercial property not residential.

 

Seek legal advice. The property may not meet the business real property test which is defined by SIS Act and a tax ruling. Hence it would be prohibited as s66 SISA only permits business real property IMMEDIATELY prior to the acquisition. The required test is NOT if the property is commercial property !!!

A small but critical legal distinction

The issue of you being a associate and operating the business needs legal clarity too. The SMSF would need a investment strategy that addresses the deferred rent expectations and this could be considered a breach of the sole purpose test if the lease arrangement isnt on arms length terms

 

Thanks for the replies and info.