SMSF Overseas Property

Buying SMSF Overseas Property

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A SMSF can in invest in all types of property such as indirect property investments, direct property (residential, commercial, industrial and rural) and property located overseas.

Anyone considering such an investment should seek out professional advice and if a SMSF is considering a particularly complex strategy, then perhaps a call to the technical experts at the ATO may be in order.

In theory there are no special rules applicable to direct overseas property but a few issues come to mind, including the following:

  • Documentary evidence that a SMSF owns the overseas property, and that the fund ownership is recognized in the country where the asset is located.
  • Any investment must still be consistent with the sole purpose test, which means, for example, a residential property located in the United States could not be leased to a fund member or relative of a fund member.
  • Any investment needs to be considered against the potential risk and return of the investment, and the cash flow needs of the fund. For example, a viable return for such an investment would also need to take into account the exchange rate between the Australian and US dollar, the cost of any flights to inspect the property, and consider the risk that such overseas trips may be more closely investigated by the ATO as a possible breach of the sole purpose test.
  • A fund’s auditor may need special documentation to verify the existence and ownership of the asset

You also ask for some information on the process to purchase overseas property and the entities necessary to proceed with such an investment. Our website cannot provide you with a list of overseas property specialists that are located in Australia, or located overseas. As a preliminary step, I suggest you speak with a financial adviser or accountant who knows a lot about SMSFs to confirm that your fund is in a position to consider such an investment, and to review the compliance process involved from an SMSF point of view.


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