As banks cease self-managed superannuation fund (SMSF) loans for residential property, alongside a downturn in the housing market and potential changes to negative gearing and the capital gains tax on the horizon, trustees may benefit from looking to its industrial counterparts.
At the end of last financial year, property investment loans held by SMSFs were worth $39 billion, or five per cent of all assets in the SMSF sector, so finding an alternative to residential property would be helpful.
CBRE director, Shaun Timbrell, said that commercial benefits also benefited SMSF trustees who were business owners.
“A major benefit is that rent paid through a SMSF can be claimed as a tax deduction as it constitutes as a company expense. Many investors prefer paying rent to their super fund, rather than someone else,” he said.
“The majority of commercial properties purchased through a SMSF are then leased back to a business operated by a SMSF member. SMSF funds can invest 100 per cent of its money in commercial real estate if a member of the fund runs a business. A SMSF can also borrow to purchase a commercial property.”
Rent on commercial properties was also strong. According to CBRE, rental yields of industrial properties averaged 4.5 – 5.5 per cent as compared to three to four per cent for residential.