Should I Buy My Office in My SMSF?

Hi Scott

I just read your column on property investment and it got me thinking about commercial property. You see, I hate paying rent and outgoings to run my psychology practice, so I am thinking about buying something instead. I am not sure if this is a good idea and would love to hear your thoughts.Kind regards

Kellie

Hi Kellie,

Great question. It can really make sense if your premises is a big part of the value of your business (like a restaurant or a retail store). If so, buying will give you more control over your business, and allow you to build up another asset. And if you buy it within your SMSF, all the lease payments will be investment earnings to your fund and so will be taxed at 15 percent. Capital gains tax (CGT) will be more favourable if you sell it when you’re retired.

That being said, buying in your SMSF is expensive and time-consuming, and can lead to your fund being too concentrated on one asset -- so you need to buy well! If you’re a small or solo practitioner, it may be better to screw down a shared rental in a clinic and focus on investing your profits elsewhere.

Scott