SMSF Power Plays:
Real Investors, Real Properties, Real Results
Many Australians are turning to Self Managed Super Funds (SMSFs) to take greater control of their retirement wealth. One of the most effective strategies is using an SMSF to purchase commercial property, creating long term income, tax advantages and a stronger financial future.
Below are two recent SMSF case studies that show how smart structures, the right lending strategy and quality assets can deliver strong results for investors.
Case Study 1: SMSF Purchase of Business Premises — A Smart, Tax Effective Strategy
A savvy business owner used their SMSF to buy a newly built commercial industrial unit, which would become their future home of their trading business. Using a SMSF commercial loan gave them flexibility, control and a tax effective way to build long term wealth for retirement.
The Challenge: The SMSF was newly established, the property was still under construction, and the purchase was interstate. Construction delays caused lender approvals to expire several times, meaning the application had to be rewritten with updated financials and contribution plans each time.
The Strategy: We financed a new SMSF with limited history and coordinated the purchase of a commercial unit that wasn’t yet complete. As delays continued, we managed multiple approval expiries, navigated NSW and QLD process differences, coordinated the SMSF trustee, bare trustee and trading business, and ensured the related party lease met SIS Act and lender rules.
The Outcome: Once construction finished and the Occupation Certificate was issued, the SMSF settled on the property under the LRBA. The business then leased the premises from the SMSF on commercial terms. This strategy allowed the owner to operate from their own purpose built premises, grow wealth inside super at concessional tax rates, maintain control of a key business asset and strengthen long term retirement outcomes.
Case Study 2: Turning A SMSF Into a High Yield Warehouse Investment
An office worker and a teacher wanted a straightforward, tax effective way to grow their retirement savings. They chose to use a SMSF to buy a commercial property that could provide steady rental income and long term growth.
The Strategy: They purchased a 150sqm light industrial warehouse with a mezzanine for $830,000. After combining their super balances to create an SMSF with $500,000, they contributed $330,000 toward the purchase and borrowed the rest through a 60% LVR SMSF loan. Their monthly repayments were $3,447.
When the property was completed, they found a tenant within four weeks. The tenant signed a 3 year lease (with a 3 year option) plus outgoings and pays $3,458 per month plus all outgoings. This provided the SMSF a 5% gross rental yield and means the superfund doesn’t have to cover council rates, strata, water or management fees.
The Outcome: The rent covers the loan repayments, making the investment easy for the SMSF to hold. Their ongoing super contributions can also help pay down the loan faster, potentially clearing it in approx. 12 years if required. After settlement, the SMSF still has more than $130,000 available to invest in other assets or managed funds. Overall, the couple now have a simple, tax effective commercial investment that supports their long term retirement goals.
Ready to Explore an SMSF Commercial Property Strategy?
If you’re considering using your SMSF to purchase commercial property, whether for your own business or as an investment, we can help you understand your borrowing options, structure the transaction correctly and guide you through the entire process.
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