All Topics / Help Needed! / buy property overseas with SMSF

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  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    10000,

    What the SIS act requires is that a SMSF buying property needs to set up a bare trust to buy it in. The trustee of the bare trust can mortgage that property and only that property. The trustee of the bare trust is acting for the SMSF trustee and is just the legal owner of the property temporarily while there is a mortgage on it.

    So if you could work out a situation in a foreign country where a bare trust can be established and find a lender willing to lend to this trustee on the basis that they are the legal owner for someone else and then that may meet the guidelines in the SIS Act. Many hurdles to overcome though. Deposit has to be paid for by the SMSF etc.

    No Australian lender is going to lend for overseas properties with the loan secured on those properties. This is even more the case if there will be a SMSF involved.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Rick as Terry has mentioned i would say No initially but without knowing your situation it could well be viable.

    What you have to bear in mind is cost v choice of investment and realistically how quickly will the fund grow.

    If you a PAYG employee earning 100K per annum and your employer is making contributions of $9K per annum then would take a few years to build up to level where the cost of managing would be equivalent to a retail fund.

    Of course if you intend to be making an employee contribution then the fund will grow at a quicker rate.

    Reason most Financial Planners don't recommend it is because they can't see much of a commission in a $50K SMSF when it comes to Managed Fund investment etc etc.

    I have had a few clients set up their SMSF with $50K and then stick the whole lot in a Term Deposit.

    Their attitude was the fund was at least growing by 5% wheare as their Retail Fund had gone backwards for the past 5 years.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of jaideepmjaideepm
    Member
    @jaideepm
    Join Date: 2012
    Post Count: 4

    Hi Guys,

    Am pretty new to property investing and know very little about the how SMSFs work, but going through the thread i understand that the biggest hurdle is that no lender overseas would be willing to lend based on the regulatory requirements in Australia. My question then is what if there is no lending involved or if the lending requirements are fulfilled by a private loan from say a family member. I am in a similar situation and would like to setup a SMSF to invest in India. I have 2 options either pool funds with my Dad or to use my own money, which i must add would mean over 90% of my currently SF balance.

    Any thoughts on whether this would work?

    regards

    Jai

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    jaideepm wrote:
    Hi Guys,

    Am pretty new to property investing and know very little about the how SMSFs work, but going through the thread i understand that the biggest hurdle is that no lender overseas would be willing to lend based on the regulatory requirements in Australia. My question then is what if there is no lending involved or if the lending requirements are fulfilled by a private loan from say a family member. I am in a similar situation and would like to setup a SMSF to invest in India. I have 2 options either pool funds with my Dad or to use my own money, which i must add would mean over 90% of my currently SF balance.

    Any thoughts on whether this would work?

    regards

    Jai

    Jaidee you must be Thai!

    What you are proposing about is dangerous. have a read of s65 of the SIS Act Lending to members of regulated superannuation fund prohibited

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of gmh454gmh454
    Member
    @gmh454
    Join Date: 2003
    Post Count: 537

    I have just done one of these for a client, in Australia.

    plenty of equity

    lease in place

    bare thrust

    etc etc

    and it is painful, even with everything going okay

    all the people who are saying NO here are the ones who genuinely help people here, everyone else on this thread is just talking about things they know nothing about

    No, not possible, negative, how many ways do you need it spelt

    you may be able to, without telling people what you are really doing get it done, or through some bank offshore, who does not even know what SIS or SMSF is, get the loan BUT good luck in getting a clean audit

    Profile photo of jaideepmjaideepm
    Member
    @jaideepm
    Join Date: 2012
    Post Count: 4

    Hi Terry,

    Thanks for your reply as mentioned i have very little knowledge of an SMSF or the regulations surrounding it which is why i asked.

    And no i am not Thai, whatever you mean by that!

    regards

    Jaideep

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Jaideep.

    Sorry I though you must have been Thai because "Jai Dee" in Thai means kind hearted so I thought your user name was trying to say you were a kind hearted property manager (pm).

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of ankitjainankitjain
    Participant
    @ankitjain
    Join Date: 2006
    Post Count: 27

    Hi, I have 123K in my super account. I wish to buy a property in india via my SMSF. I wont need any home loans. Do you see any challenges with this.

    Regards

    Amit

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    ankitjain wrote:
    Hi, I have 123K in my super account. I wish to buy a property in india via my SMSF. I wont need any home loans. Do you see any challenges with this.

    Regards

    Amit

    It could be possible with careful planning. All the normal rules will apply.
    One problem will be the bank account.
    Another issue will be doing the tax returns.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    I have a UK assets in my SMSF and no issues but just need to make sure as Terry mentioned your Tax affairs can be catered for.

    Also make sure that a sole investment in a property asset is in line with the investment objectives of the Trust Deed.

    Starting to see some issues with some of SMSF Audits we have been involved in with clients.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

Viewing 10 posts - 21 through 30 (of 30 total)

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