SMSF Commercial Property

Discussion in 'Superannuation, SMSF & Personal Insurance' started by B-Mac, 4th Dec, 2017.

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  1. B-Mac

    B-Mac Well-Known Member

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    Hey finance experts,

    I currently have $41k in super.

    Looking to buy a commercial property for $450k in sydney.

    I will occupy this property to run my business.

    What do i need to do to get this over the line?

    Thanks
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    I'd hazard a guess - another 20%+ for the deposit, funds for closing costs and operating costs (buffers) & a deed which allows full exposure to a single asset/asset class.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Youd need to look to fund with equity and serviceability outside the SMSF and onlend that.

    The SMSF has no chance on its own

    please seek specifictax and structure advice


    ta
    rolf
     
  4. DaveM

    DaveM Well-Known Member

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    About another $165k in super
     
    Last edited: 4th Dec, 2017
  5. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Depends on your profession - if you are a medico (and its under $1mil) then you can borrow 100% LVR. If you are not a medico and just a mere mortal like the rest of us then its 65% LVR.
     
    Last edited: 4th Dec, 2017
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  6. Redwood

    Redwood Well-Known Member

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    Hi there, unless you are in a position to add a member or non concessionally contribute or a related party loan, I doubt how it will happen. Further, in order to set up an SMSF you will now need a SOA and this will need to dictate your strategy and conclude its in your best interests. Otherwise you can use an online provider to set up.

    It can be done, just needs a contribution strategy.

    This is not financial advice.

    Cheers Ivan
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Are related party loans even possible now on high LVRs - non-commercial terms?
     
  8. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Good to know.
     
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  9. Redwood

    Redwood Well-Known Member

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    Yes the ruling is PCG 2016/5 from memory, its 70% max LVR - added to a NCC of $100k or bring forward of $300k it can happen, contributions light my eyes....

    Cheers, Ivan
     
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  10. Tom Simpson

    Tom Simpson Well-Known Member

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    There's no minimum fund size with some lenders for commercial purchases however the ATO encourages $200-250k as a minimum fund size otherwise the fees can outweigh the benefits.

    Maybe seek a family member to combine forces with.
     
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  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Divine intervention. With $41K it wont happen.

    Licensed financial advice would be needed to determine if there is anyway that may involve others or rollovers or contribution strategies to get it at a point where it could work. If you had the balance of funds in property equity outside super there is a way BUT its also not perfect.
     
  12. Ross Forrester

    Ross Forrester Well-Known Member

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    With $41k I am concerned you will be eaten by fees.

    Consider buying the property outside super. If it is connected to the business asset you have the potential to make the sale of the asset tax free.

    So you could enjoy negative gearing at the higher tax rates and enjoy a tax free sale event.

    If you wanted you could build your super balance up until it is high enough to warrant purchase and then sell it to the super fund - but that is all later stuff.

    Renting an asset to your business can be great - but it can also limit the direction of the business. Make sure that your business strategy, and exit plan, is strong.

    I have sen many businesses that are restricted for growth because the owner does not want to lose a tenant.
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    A common discussion I have with clients.........

    keep the main thing the main thing,

    until the distractions are really digestable.

    ta
    rolf
     
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  14. Redwood

    Redwood Well-Known Member

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    or they can use esuper or other online providers.....
     
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