If eligible to sell your business property to your SMSF, you can receive a tax concession on investment earnings and hence, if you are eligible, you will only be taxed at 10% as per capital gain tax (CGT). Also, if you are careful and structure the sale transaction right you may pay no CGT when you sell the property, when paying a pension from your fund.
Like most things with the ATO, there are strict rules and guidelines surrounding the sale of a business property to a SMSF.
Eligibility
- Must be defined as a business real property, meaning it needs to be a freehold or leasehold interest in real property that is capable of assignment or transfer.
- Needs to be wholly and exclusively in one business
- If the property is being acquired from a related party, then related party transaction rules apply
- Business real property doesn’t include property used partly for running a business and partly for residential purposes.
Exceptions
- Above restrictions do not apply to farmers whose SMSF can own a farm and lease it to a member
- The predominant purpose of the entire rural property can’t be for private of domestic purposes
- Small businesses can use their SMSF monies to own their business premises
Alternatives
For a list of alternate options and useful mechanisms, click here.
Interested in learning about how you can sell you business property to your SMSF? Give us a call today to talk to one of our small business experts or book a meeting with our director.