One of the expenses involved in transferring business real property to a SMSF is to ensure a lease is in place for market value rent.
SMSF leases are usually for a term of between 1 and 3 years and often include an option to review. Leases therefore have to be renewed as they expire after a set period of time.
Recently we have been providing our clients with an alternative, a suitable periodic lease.
A periodic lease usually has an initial term of one year and after that it continues for indefinite yearly terms. It ends when one party decides it does in accordance with the terms of the lease agreement.
A clause ensures rent is reviewed on a regular basis (yearly or bi yearly) to ensure rent keeps up with the market.
A periodic lease can be registered on the title but as its initial term is often only one year, it is not essential.
This is a one off cost to the client with the flexibility to increase/decrease rent according to market fluctuations.
Please contact business lawyer, Linda Alexander or any solicitor from our commercial group, if you have any queries.
This article is general information only and should not be relied on without obtaining further specific information.