Purchasing medical consulting rooms via super using a Self-Managed Superannuation Fund (SMSF) can be a fantastic strategic investment option for medical specialists in Australia under the right circumstances as they build their Private Practice.
Superannuation is broadly taxed at a concessional 15% while you are still working, and if you meet certain conditions, withdrawals can be tax-free in retirement. This tax structure can result in significant savings over time, especially if you have a long-term outlook and sufficient funds within your superannuation.
The speciality, location and size of the medical group may influence the decision to invest in a commercial real estate asset in conjunction with running a medical services business. However, it’s essential to navigate this process carefully, considering all of the legal, regulatory, and financial implications.
The key questions you should be asking yourself before purchasing medical consulting rooms via an SMSF are:
Am I following the Super rules?
Ensure that the purchase of medical consulting rooms complies with the rules and regulations governing SMSFs. Getting advice from legal and financial professionals specialised in SMSF compliance is the best way to avoid potential penalties and breaches which could be very onerous if found to be doing the wrong thing.
Do I have an Investment Strategy?
By becoming a Trustee of an SMSF you need to develop a comprehensive investment strategy for your SMSF that aligns with your retirement goals, risk tolerance, and investment objectives. Does the purchase of a commercial property meet these objectives? Will there be enough liquidity and diversification within your SMSF to meet property costs as well as running costs of the SMSF? What other assets will form part of the SMSF over time and what contributions will be made to the SMSF? Also, consider factors such as location, property type, rental yield, and capital appreciation potential when selecting medical consulting rooms as an investment asset.
Have I done enough due diligence on the preferred property?
You should conduct thorough due diligence on the medical consulting rooms you intend to purchase and whether the property is suited as an SMSF asset. This includes evaluating factors such as market demand, property condition, tenant covenants, lease terms, and rental income. Typically, it would be worthwhile to engage independent property valuers and legal advisors to assess the property’s value and ensure transparency in the transaction given the large capital investment you are making.
Another 3 questions to be asking will be covered in our next edition.
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 Advisor, 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.
Justin Porrins works with medical specialists, professionals in the mining/oil & gas industry and small business owners to empower them with the right information, guidance, and direction to make confident life decisions and achieve their ultimate goals. He builds close relationships with his clients to understand their needs and aspirations very well, then applies collective expertise to develop and implement personalised strategies and solutions, ensuring optimal financial outcomes and wellbeing.