SMSF trustees should consider including their business premises as a super fund asset to maximise the available legislative tax benefits, according to an international property manager.
“We believe that business owners are potentially being disadvantaged by not investigating the option of using a SMSF vehicle to purchase a business premises,” Ausin Wealth Group director Mark Morcos said.
“By purchasing a building that business owners are currently renting, they have the potential to place themselves in a stronger financial position for the future.
“For many years we have been advising clients about placing business premises into a SMSF.
“This strategy makes smart business sense as their dollars are put to work in an asset that can directly benefit them.
“There is also greater business continuity with the asset and SMSF working together.”
Morcos said many business owners were unaware of the tax benefits on offer should they run a business from a premises their SMSF owned.
These include incurring a capital gains tax (CGT) liability of 10 per cent if the property is held for over a year or potentially not having to pay CGT at all if the property is sold while the SMSF is in pension phase.
The strategy also means expenses such as depreciation, interest and those incurred from maintaining the property would be tax deductible.
Morcos said the strategy had broader appeal now due to the ability of using a limited recourse borrowing arrangement to acquire a property.
However, he did warn trustees to carefully consider how much could be borrowed, whether or not the investment was sound, the average yield from rental properties at the time, and a clear financial strategy before undertaking the exercise.
