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#Accounting Answers: How Can I Buy a Commercial Property?

#Accounting Answers: How Can I Buy a Commercial Property?

Why is an SMSF better for investing in commercial property, and leasing it back to yourself, than an investment trust?

Many people ask us how is it that they can stop paying somebody else for their lease.

A lease is a big expense, and they want to somehow cash in on that money, or that benefit.

Ultimately there's three ways that you could potentially buy your own commercial property, your own office, your own warehouse and pay yourself that. There's three ways; I'm only going to recommend one, but I'm going to explain the other two so you understand why the third is the most important.

The first way you could do it is buy a commercial property that you might have your eye on, in your own name.

The second way you could do that is by purchasing that in an investment trust, say a company or a trust. Why an investment trust is far better than buying it in your own name is you've got ultimate control over who pays the tax, so ultimately when you come to sell the property you've got control over who pays that tax. It might be far lower in someone else's name than in your own.

The biggest reason why you'd never invest in property in your own name, and run your own business in your own name, is because of protection, your asset protection.

It's like, having a trust is like going out into the business world with a bulletproof vest on.

There's employee's, there's suppliers, there's competitors who all want a piece of you, and having a bulletproof vest or having some form of asset protection is going to protect you.

Out to the two, you'd definitely do it through an investment trust over your own name, any day of the week, but this isn't the best one.

 

The third and most recommended choice is a self-managed super fund.

Why is an SMSF better for investing in commercial property, and leasing it back to yourself, than an investment trust?

Well and SMSF you can pay even less tax, how awesome is this, than the investment trust.

In investment trusts we want our clients to pay no more than thirty percent tax, in a self-managed super fund environment you can pay either between fifteen, or an advanced strategy is ultimately you could get it down to paying zero percent tax. That is cool.

You get that asset protection which is, remember, your bulletproof vest.

The other really cool thing, which to me makes it a no-brainer, is that you get access to money that ... I don't know how you feel about SMSF, about all your super money. I've been putting it away, but I'm only in my thirties. I don't think I'm going to touch it. It's like it's money that I know it's mine, but it's not really mine because it's so far away. I can now access that. I can now play with that. I can turn something that's a distant dream into a tangible, brick and mortar, and I'm paying myself for that. That is so cool.

 

So step one, you've got to have yourself in a super fund set up, rollover.

Step two, you've got to talk to a great advisor like us and we'll implement one of these cool strategies for you.

smsf dream

 

 

Ben Walker of Inspire SMSFS Pty Ltd (1243433) is an authorised representative of Finance Wise Global Securities Pty Ltd ABN 60 146 708 045.  Finance Wise Global Securities Pty Ltd holds an Australian Financial Services License (No. 397877).