The Power of a Collaborative Team: Securing a Business Property through an SMSF

The Client, the successful local practice owner, had long dreamed of purchasing her business premises. This investment would eliminate rental costs and add a valuable asset to her retirement portfolio.

To make this purchase tax-efficient and secure, the Client turned to her trusted business adviser, Jaye; financial planner, Nick; mortgage broker, Mick; and an insurance specialist, who played an essential role in her strategic plan.

Together, this team helped Client set profit targets, structure her finances, and protect her investment within a Self-Managed Super Fund (SMSF). Their goal was clear: to support the Client’s long-term financial security while making her dream of owning her business premises a reality.

1. Building the Foundation with the Business Adviser

The Client’s business adviser, Jaye, had been her trusted guide through previous financial milestones, helping her manage cash flow and set growth targets.

Recognising the importance of this SMSF purchase, Jaye outlined the key steps needed to secure the property within a tax-efficient, protective structure.

• Setting Profit Targets: Jaye worked with the Client to set profit milestones to ensure sufficient cash flow for the property purchase and loan servicing. These targets aligned with both the business’s operational needs and her retirement goals.
• Establishing the SMSF: Jaye managed the SMSF setup, covering all necessary compliance requirements, legalities, and tax structures. This SMSF allowed Client to purchase her premises within a tax-advantaged environment, building her retirement assets and protecting her personal wealth.
• Managing Compliance and Tax: Once the SMSF was up and running, Jaye continued to handle its ongoing compliance, tax filings, and financial reporting, ensuring the SMSF remained in alignment with regulatory standards.

2. Securing the Right Financing Solution with the Mortgage Broker

After the SMSF was set up, Jaye introduced Client to Mick, a mortgage broker experienced in SMSF lending. Mick was instrumental in structuring a financing plan that met SMSF requirements while maintaining Client’s business cash flow.

• Arranging the SMSF Loan: Mick structured a Limited Recourse Borrowing Arrangement (LRBA), a loan type designed specifically for SMSFs. This loan protected other assets within the SMSF by limiting the lender’s recourse to only the purchased property.
• Collaborating with Jaye on Profitability: Mick reviewed the business’s cash flow and profit targets alongside Jaye to confirm the feasibility of loan repayments. This structured repayment plan aligned with the SMSF’s cash flow, ensuring Client could meet her obligations without compromising her business’s cash reserves.
• Ensuring Future Flexibility: Mick and Jaye worked together to establish loan terms that offered flexibility, giving Client the confidence to proceed with the property purchase knowing her business cash flow and growth goals were secure.

Outcome: Mick secured a competitive, SMSF-compliant loan with terms that supported the Client’s cash flow and enabled her to move forward confidently with the property purchase.

3. Protecting the Investment with the Insurance Specialist

With the property acquisition underway, Jaye recommended that the Client consult with an insurance specialist to create a plan to protect her investment within the SMSF.

• Commercial Property Coverage: The insurance specialist recommended commercial property insurance tailored to cover key risks such as property damage, liability, and income protection. This insurance coverage secured Client’s investment, ensuring her business could continue operating without interruptions due to unforeseen events.
• Income Protection and Key Person Insurance: Recognising that Client’s business was the primary tenant and income source for the SMSF property, the insurance specialist advised taking out key person insurance to ensure rental income continuity if Client were unable to work. This safeguard allowed Client’s SMSF to meet its loan repayments regardless of personal circumstances.
• Aligning with SMSF Regulations: The insurance specialist ensured that each policy complied with SMSF regulations, keeping the property and SMSF fully protected.

Outcome: The Client’s SMSF property was protected from potential risks, securing her investment and rental income with insurance coverage tailored to the specific requirements of SMSF-held assets.

4. Overseeing SMSF Performance and Diversification with the Financial Planner

With the SMSF, financing, and insurance in place, Jaye and Client worked with Nick, her financial planner, to provide ongoing oversight and ensure that her SMSF remained compliant and profitable over time.

• Assessing SMSF Suitability and Best Interest: At the outset, Nick confirmed the SMSF’s suitability for the Client’s goals, assessing the long-term fit of holding the property within her superannuation framework.
• Facilitating Rollovers and Investment Strategy: Nick facilitated the rollover of the Client’s existing superannuation into the SMSF to fund the property purchase. He then worked with her to tailor an investment strategy that balanced the SMSF property with alternative investments, ensuring a well-diversified portfolio.
• Ongoing Compliance and Performance Reviews: Nick regularly reviewed the SMSF’s performance, advising on contributions and asset growth while ensuring compliance with SMSF regulations. This strategic management helped the Client’s SMSF remain effective as a business and retirement asset.

Outcome: Nick’s guidance ensured that the Client’s SMSF remained aligned with her goals, balancing the property purchase with other investments for long-term growth.

Conclusion: A Unified Team Driving Success

Through collaboration and expertise, Jaye, Mick, Nick, and the insurance specialist each played a vital role in helping Client secure her business property within an SMSF, achieving both immediate and long-term goals:

• Jaye, the Business Adviser and Accountant: Managed the SMSF setup, compliance, and tax matters, setting financial targets, and connecting her with specialists.
• Mick, the Mortgage Broker: Arranged a compliant LRBA loan that protected Client’s SMSF and business cash flow.
• The Insurance Specialist: Tailored insurance solutions that protected the SMSF property and ensured rental income continuity.
• Nick, the Financial Planner: Provided SMSF suitability advice, facilitated rollovers, and created an investment strategy that balanced property and alternative assets.

Together, this unified approach ensured Client’s dream of owning her business premises became a reality within a safe, tax-efficient structure that protected her assets and supported her retirement goals.

At Aspira, we believe in a team approach that goes beyond traditional financial advice, creating a solid foundation for achieving your goals. Contact us to learn more about how we can support your financial journey with a coordinated team of trusted advisers.

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