SMSF investment in commercial property carries more risk than residential if a “multi-tenanted” approach is not taken, according to a property group chief executive.
Speaking at the Institute of Public Accountants’ 2014 Tasmanian Congress, Spencer Property Group chief executive and national director of Propell National Valuers Kel Spencer said commercial investment in property plays a “significant” role in the Australian investment landscape.
Mr Spencer also told SMSF Adviser he thinks investing in commercial property is “perfect” for trustees and produces higher yield than residential if it is “de-risked”.
“We see a particular style of [commercial] property being ideal for SMSFs, and that is the multi-tenanted properties that are well constructed and well located, so they are able to be re-leased if you lose a tenant,” he said.
“I think there is always a bit more risk in commercial, but you can de-risk it with the multi-tenanted approach."
Mr Spencer added that transferring a business premises into an SMSF is a “fantastic thing to do”, with trustees paying less interest than they would in rent.
“Certainly with low interest rates they are going to pay a lot less in interest than they would be in rent, so it puts your business on a better footing,” he said.
“The only thing is it doesn’t give it the flexibility. If the business grows you haven’t quite got the flexibility to come to the end of the lease and then go and lease something bigger.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 26 Sep 2017ATO set to add new items to SMSF watch listBy Katarina Taurian
- 26 Sep 2017ATO tipped to scrutinise property development and unit trustsBy Jotham Lian
- 26 Sep 2017Statistics reveal full impact of events-based reportingBy Staff Reporter
- 26 Sep 2017Tax advice exemption discrepancy driving away accountantsBy Jotham Lian
- 26 Sep 2017Consultant flags strategies to negate complex ECPI calculationsBy Miranda Brownlee
- 25 Sep 2017Survey results point to major concerns with new reportingBy Miranda Brownlee
- view all
- ATO tipped to scrutinise property development and unit trusts
One big four accounting firm says the ATO has started to zoom in on property development in unit trusts being held in SMSFs and the calculat...read more
- Statistics reveal full impact of events-based reporting
Analysis conducted by SMSF software provider BGL Corporate Solutions has indicated that around 290,000 SMSFs will be affected by the events-...read more
- Tax advice exemption discrepancy driving away accountants
A discrepancy in ASIC’s treatment of licensed and unlicensed accountants in relation to the tax advice exemption instrument is driving acc...read more
- view all