There are many benefits in owning your business premises through your SMSF, but there are a number of disadvantages to consider before making a decision. Depending on the size of your SMSF, purchasing a single commercial property could have a major impact on diversification within your fund.
If you have a large multi-million dollar super fund, and several premises, this may not be an issue, but if you have the usual SMSF balance you may find that a commercial property purchase will see a dangerously high percentage of your retirement savings held in a single asset.
The issue is that if your property or commercial property as a whole suffers a major drop in value, the value of your entire SMSF balance will suffer a similar drop. It is important to have your SMSF sufficiently diversified to avoid such dangers.
Another potential disadvantage is the lack of flexibility offered when purchasing your own business premises. If your business outgrows your premises, having to go through the buying and selling process again can be very costly when compared to simply switching leased premises.
When purchasing your own business premises via your SMSF it is important to take into account your future growth and space needs that could affect your choice of property.