Owning a commercial property in your SMSF may be considered to be a sound investment for your future
However, when owning property or having a self-managed superannuation fund, there are particular regulations and obligations that you need to follow when owning property.
2 August 2022
With your SMSF owning a commercial property, it is imperative for compliance with the Superannuation Investments (Supervision) Act (the “SIS Act”), that you have a written commercial lease in place for that property. This is even if you are leasing the property back to a related entity of yourself.
In addition to ensuring that you have a written lease in place, you need to make sure that this lease is prepared at arm’s length and on a commercial basis.
That is, your lease needs to have commercial terms which you would put into the lease for an unrelated third party. For example, you would need to have standard terms in relation to outgoings, termination, interest, payment terms, and default.
One reason to maintain a valid commercial lease, is to maintain your compliance with the SIS Act. The other reason is that if a decision is made to sell the business being operated at your commercial property, then that lease is an asset in the business sale.
If you are unsure if you have a valid lease, would like advice on an existing lease, or assistance in preparing a new arm’s length commercial lease for your SMSF owned commercial property, our Commercial and Property Lawyers at Access Law Group would be able to assist you.