For many Australian small business owners, rent is one of the largest ongoing overheads. But have you ever stopped to calculate where that money is actually going?
In a recent case study, a client was paying $102,000 per year in rent. After being told their landlord was looking to sell – forcing them to potentially move their business for the second time—they realized they were effectively funding someone else’s retirement while facing zero long-term security.
Here is how we helped them flip the script and start paying that rent to themselves.
The Strategy: Moving from Tenant to Owner
The strategy involves a common but powerful transition: using a Self-Managed Super Fund (SMSF) to purchase commercial property.
- Consolidation: The business owners rolled their existing retail superannuation balances into a newly established SMSF.
- The Purchase: Using the combined balance as a deposit and securing specific SMSF lending, the fund purchased the commercial premises.
- The Lease: The business now pays the exact same $102,000 in rent it was paying before. However, that money is now paid directly into their own SMSF.
Why This Matters for Your Retirement
From the perspective of the business’s daily operations, nothing changes – it is “business as usual”. However, the long-term wealth impact is staggering.
Over a 10-year period, that same $102,000 annual expense translates to over $1 million directed into the owners’ own retirement fund – rather than a landlord’s pocket. And that’s before factoring in the potential capital growth on the property itself, which also accumulates inside the tax-effective superannuation environment. The money was always leaving the business; now, it’s building the owners’ future.
Is This Right for You?
Owning your premises via an SMSF provides:
- Security of Tenure: No more worrying about a landlord selling the building from under you.
- Wealth Acceleration: Redirecting a mandatory business expense into a tax-effective superannuation environment.
- Asset Protection: Commercial property held within an SMSF can often be better protected from business creditors.
If you’re tired of seeing your hard-earned revenue build someone else’s nest egg, it may be time to explore whether an SMSF property strategy is the right fit for your business.