Business real property
The property generally needs to satisfy the applicable business-real-property and fund investment requirements.
SMSF COMMERCIAL PROPERTY
Commercial property inside super. Structure first.
An SMSF may be able to acquire eligible commercial premises and, in permitted circumstances, lease the property to a related business on arm’s-length terms.
Discuss SMSF commercial finance ↗SPECIALIST COMMERCIAL LENDING
The property, fund, borrowing structure and lease must work together.
SMSF commercial property lending commonly uses a limited recourse borrowing arrangement and a separate holding trust. The documents and ownership sequence matter, and mistakes made before settlement can be difficult or costly to correct.
Where the property is business real property and the arrangement meets the applicable rules, an SMSF may be able to lease it to a related business at market rent and on arm’s-length terms. This is not automatic: eligibility and compliance must be confirmed by qualified SMSF, tax and legal advisers.
Related-business lease
A related business may be able to occupy the premises where the lease is properly documented, at market terms and compliant with superannuation rules.
Limited recourse structure
The borrowing and holding-trust structure must be established correctly before the transaction proceeds.
Fund serviceability
Lenders may consider contributions, rental income, fund expenses, liquidity, existing assets and proposed repayments differently.
A PURPOSE-FIT REVIEW
What the lending review needs to cover.
- Fund and trustee structureThe SMSF trustee, holding trustee and proposed borrower or guarantor requirements.
- Property eligibilityUse, zoning, valuation, lease position and lender appetite for the security type.
- Fund cash flowContributions, rent, investment income, expenses, liquidity and loan repayments.
- Related-party arrangementEvidence that any lease and dealings are on arm’s-length commercial terms.
- Exit and riskLoan term, possible balloon repayment, vacancy, contribution limits and future fund strategy.
WHERE I COME IN
Finance is one part of an SMSF property decision.
I focus on the commercial lending pathway: lender appetite, serviceability method, security, contribution, loan structure, terms and required evidence. I can also coordinate with your accountant, licensed financial adviser and SMSF solicitor.
I do not establish the SMSF, advise whether acquiring property is appropriate for the fund, or confirm tax or superannuation-law compliance. Those decisions must be addressed by appropriately qualified advisers before you sign a contract or commit to finance.
Discuss SMSF commercial finance ↗This page provides general lending information only. It is not financial product, superannuation, investment, tax or legal advice and does not recommend establishing an SMSF or acquiring property through one. SMSF borrowing is complex and subject to superannuation law, trust documentation, lender policy and property eligibility. Related-party leases must satisfy applicable legal and arm’s-length requirements. Obtain advice from a licensed financial adviser, registered tax agent/accountant and an experienced SMSF lawyer before acting. Credit approval is not guaranteed.