Overseas Property

SMSF Investing in Overseas Property: Compliance and Administration Services

A Self-Managed Super Fund (SMSF) can invest in overseas properties, and we offer comprehensive administration services to facilitate this type of investment. To ensure compliance with relevant regulations, several key considerations must be addressed:

Key Compliance Requirements:

1. Sole Purpose Test: Investments must solely provide retirement benefits to SMSF members. Any other purpose would breach compliance regulations.
2. Ownership Structure: The property must be purchased in the name of the SMSF. If this is not feasible, other structures such as a bare trust or an LLC may be required.
3. Related Party Restrictions: Tenants cannot be related parties. The property must not be used by any SMSF members, their relatives, or related entities.
4. Annual Property Valuation: A property valuation, including comparative sales figures, must be provided as of 30 June each year to ensure compliance with ATO’s valuation guidelines.
5. Market Rate Rentals: Rental income must be appraised annually to confirm it aligns with market rates.
6. Tax Implications: Be aware of potential tax liabilities in foreign countries where the property is located.
7. Investment Strategy and Deed Compliance: Ensure that your SMSF’s deed and investment strategy, if not provided by iCare Super, allow for overseas property investments.
8. Borrowing and Custodian Trust: If borrowing is involved in the property purchase, a custodian trust (bare trust) must be established before signing the purchase contract.

Country-Specific Requirements:

Each country has distinct requirements for purchasing property through an SMSF:

• New Zealand, UK, Finland: Properties can typically be purchased directly in the name of the SMSF.
• United States: An LLC is usually required.
• India: Appropriate local structures must be established.
• Other Countries: Case by case.

Given the complexity and variability of international property investments, consulting with an SMSF specialist is crucial. Mistakes in structuring can be costly and may lead to compliance issues.

Contact us today to ensure your SMSF’s overseas property investment is structured and managed correctly.