Purchasing your own Business Premises

Most clients own their own home, and therefore have an automatic exposure to residential property. Many have one, two or even more residential rental properties. Usually these have been very good investments. Commercial property is, however, very much a separate asset class and separate exposure to it is generally recommended. 

Is it a good investment?

Commercial property, in its various forms, has generally been a very good investment and will probably continue to be a very good investment. You can get exposure to commercial property through:

For example:  Medical practices, such as GP's, Dentists, and Chiropractors often have very good opportunities to add to their SMSF's, business balance sheet, or personal asset base via buying a commercial premises for their business.

For example: Medical practices, such as GP's, Dentists, and Chiropractors often have very good opportunities to add to their SMSF's, business balance sheet, or personal asset base via buying a commercial premises for their business.

  1. Buying commercial property to house your own business within it (i.e. your doctors practice, a warehouse, shop, or manufacturing plant).
  2. Buying commercial property to lease it out to (i.e. leasing a warehouse to Bunnings, or a retail shop, or a chiropractor for example)
  3. Buying shares in AREITS (Australian Real Estate Investment Trusts). An AREIT is a body of investors that collectively owns commercial property - shopping centres, skyscrapers, hotels, residential towers. You can buy shares in AREITS (i.e. on the ASX sharemarket).
Some businesses choose to buy rather than rent their business premises. To do this, they take out a commercial property loan.

Commercial property loans

Commercial property loan repayments - effect on cash flow

Many small businesses prefer to rent rather than buy for cash flow reasons. However, there are a number of factors that can make buying your business premises an attractive option.

Commercial property - self managed super funds

Many business owners these days have their own self managed super funds (SMSF's). Rather than invest in a share or property trust, some of these businesses choose to invest their super funds in their own commercial property.

Commercial property - interest is tax deductible

If the property financed by a commercial property loan is used entirely for business purposes, the interest charges on the loan are wholly tax deductible - as are any maintenance charges also.

If the property is partially used for personal purposes, only a commensurate proportion of your interest and maintenance charges is tax deductible.

Your commercial property could make a capital gain

Over recent years, property prices have appreciated markedly. If this trend continues, you might make a capital gain on your commercial property in the medium to long term, adding to the value of your net worth (i.e. in your SMSF), or your business value.


HOW WE SUPPORT CLIENTS

At Profy Finance and Wealth, we have supported business and clients who are looking to finance commercial property assets, through:

  • Arrangement and recommendation of SMSF or structures to suit their situation
  • SMSF lending
  • Ensuring financial affairs are structured effectively
  • Helping them plan for any taxation outcomes
  • Wealth planning, investing, and retirement

At Profy Finance and Wealth, we cover financial advice and mortgage & finance broking to get more holistic results for our clients. Learn more about how we could help...