In our final edition of what you should be asking yourself before purchasing medical consulting rooms via super using an SMSF, we cover the final three questions:
What happens if I don’t have enough money in super, and can’t facilitate adequate finance?
There are other structuring options to consider if other options fail – potentially set up of a tenant in common structure between an SMSF and other entities or set up of other structure to own the property and the property structure is then owned by an SMSF and other entities, with ownership moving to the SMSF over time.
However, the additional, cost, complexity and tax implications of changing the ownership over time (and financing limitations) needs to be weighed up against the option of simply owning the medical rooms outside of super.
How should the property asset be managed?
It will be important to implement effective asset management strategies to enhance the value and performance of your medical consulting rooms investment. If you have a third-party tenant, maintain regular communication with the tenants, and address maintenance issues promptly. Under all circumstances, review lease agreements periodically to ensure rental income stability and property appreciation even if your practice is renting from your own SMSF, ensuring that your SMSF nest egg is growing appropriately in accordance with the investment risk taken.
What happens at retirement or exit from the medical practice?
Having an exit strategy for your SMSF investment in medical consulting rooms should be considered from the start, considering factors such as retirement planning, asset disposal, and portfolio diversification.
In the event that you own the medical rooms via an SMSF and have other Consultants in the practice paying rent to the SMSF, consideration needs to be made as to whether you should continue to be the landlord for the property if you are no longer involved in the medical practice to potentially minimise any conflicts of interest with the remaining property owners still associated with the medical practice.
Sale of the commercial property post-retirement could give the other Consultants in the practice the opportunity to implement the same SMSF strategy and provide your SMSF with a liquidity event with potential tax benefits (as outlined above).
As in all financial matters that have some complexity, it’s essential to seek advice from professionals with expertise and understand the unique challenges and opportunities faced by medical specialists. At Boutique Advisers Private Wealth, we understand the medical sector, and through our Five Pillars of Advice journey help our clients make Confident Life Decisions about their Wealth. Contact our team if you would like to know about this strategy & whether it would be suitable for your circumstances.