Business Strategies

Business Real Property into a SMSF

If a property you own is used for business purposes, it may be advantageous from a tax point of view to transfer the property into a SMSF. If the SMSF has the cash, they may be able to purchase the property from you. Otherwise, you may be able to contribute the asset into your super fund as a non-cash concessional or non-concessional contribution. Non-cash contributions are known as in-specie contributions.

You must consider a range of issues, including;

• whether the super fund has the funds and can afford to purchase the property from you, although you may be able to set up a specific limited recourse borrowing arrangement if there is not enough money available in the fund.
• whether you can afford to transfer the property to your SMSF as a contribution (subject to restrictions with concessional and non-concessional cap limits).
• whether capital gains tax will be payable by the member on the transfer or sale of the asset to their SMSF.
• the market valuation of the property, and
• whether the super fund will have adequate diversity and liquidity by owning such a (typically) large asset.

The fund’s stated investment strategy must allow for ownership of commercial property and any borrowing if required.