What Options Do You Have to Buy a Practice Property Using SMSF?

Medical practitioners, including doctors and dentists, always dream to own a commercial space to start a private practice. If you are a working medical professional and have an SMSF in place, this dream may smoothly turn into reality.

For this, you must ensure SMSF compliance all the time and know your options on how these super funds can help you in this direction. Here are some of the options you may choose after thorough consideration:

Borrow under LRBA: You may borrow a loan under Limited Resource Borrowing Arrangement (LRBA) to purchase a property for setting up a private medical facility. For this, your SMSF must have a bare trust. The option is beneficial to safeguard your SMSF assets in case of loan default. However, you must already have a set amount of funds in the SMSF account to be eligible for borrowing.Outright Purchase: As the name suggests, the option allows you to pay in cash the full amount of property. You don’t need to borrow any loan for this. Obviously, you need to have the required funds in your SMSF for this. Also, consult a chartered accountant, Newcastle to know any downsides associated with it.Non-geared Unit Trust: If your SMSF doesn’t have adequate funds for outright purchase, you may think of setting up a separate unit trust, also known as a property trust. You can partner with another person (preferably a family member) to share units in the trust and jointly purchase a property. It eliminates the need to borrow from a third-party lender.Geared Unit Trust: While everything else remains the same as in a non-geared unit trust, a geared unit trust can be set up to borrow from a lender to purchase a property. The option is suitable if you have one or more medical practitioners willing to jointly borrow a loan. Again, you must carry out tax planning with an expert to evaluate the possible issues.

As you can see, an SMSF in good health can bear great retirement benefits for you. So, make sure your super funds are in sync with superannuation laws and pass the SMSF audit every time.

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