An SMSF can invest in properties overseas if the Trust Deed and Investment Strategy of the Fund allows this type of investment.
Please note that some countries will not allow the SMSF to hold the title of the property. Therefore, a Bare Trust \ Custodian Trustee structure may need to be setup before the Fund invests in the overseas property. It is also important to note that banks generally would not issue loans for buying an overseas property.
The above structure is required for an SMSF to invest in overseas properties. The investment will need to be in the name of the SMSF or a Bare Trust/Custodian Trustee. An overseas bank account needs to be opened to receive rent payments and pay for the property expenses. The financial institution will need to meet the definition of a Deposit Taking Institution as stipulated in the Banking Act 1959.
Please note that there will be more audit requirements that needs to be addressed for investing in an overseas property. A Title Search to confirm the ownership of the property and a Market Valuation at the end of each financial years may be required as supporting documents. We recommend that a translation of all documents, contracts and agreements is prepared for investments in non-English-speaking countries.
Be mindful of the different laws and customs in all countries and the implications specific to that country. Some Asian and sub-continent countries would not allow foreign investors. A resident (preferably a member of the SMSF) of the country is generally required to represent the Fund, so that the title of the property can be accommodated in the structure. Please see the list of countries that the ATO has a reciprocal tax treaty with in order to avoid double taxes.
Investment in property
More on general information for property investments are explained here.
