SMSF loan for CIP

I am going to buy a retail property with its business using SMSF. I understand SMSF does not allow to run business. So, the SMSF has to rent CIP to my company or myself.

To apply for an SMSF loan, can I use rent appraisal to prove the rental income because the CIP is currently run by the current owner.

Thanks

 

Ideally if you / co lease the premises from the existing owner now then your SMSF can acquire the premises under the going concern basis and ignore GST on the deal. Without a lease the vendor should be charging GST which lenders wont fund. Downside is the SMSF will need to then charge you GST on rents but assuming your busienss is reg this should be creditable. You will need a legal lease with existing owner to be compliant. Then the smsf is buying premise and its lease to you / company. The test for this arrangement is imediately prior to transfer. IMO best the lease is addressed asap. Your solicitor should advise. Rent must be then paid under lease terms.

Lender should then consider the rent in the SMSF servicing calcs

If there is a existing tenant and that will continue (even for a week after sale) going concern could be available IF the existing tenant is a lease. Lender should accept existing rent as a guide to arms length rent. Or perhaps agent appraisal etc. Broker should assist this issue

Many lenders have polcies regarding how much rent etc they consider + contributions to fund + liquidity buffer etc Brokers are a good source of guidance to complexities with SMSF loans. One thing lenders dont like is cashflow burn