HI, We are planning to buy property overseas via a SMSF. I need advice if the below can be done and need experts who can help us in doing this. Preferably someone who has done this previously
A) We are three friends with Approx. 100K each in our current Super funds. We would pool together to form a SMSF.
We would buy three flats off the plan in India.C) We do not need any loans. Flats would be approximately 100K each.
D) Three friends are just the group who are considering this – If required we could do this individually as well.
Questions:
• Can this be done?
• Will the flats in India be in our name each (if we pool our Super funds) rather than the fund name.
• Is it advisable to pool funds for do it individually.
• Once the property is constructed, the objective would be to put it on rent (in 2 /3 years). I am assuming we would have to do a tax return individually in india for the rental return.
• Selling: I would assume we would sell the property in 5-8 years and repatriate the funds to Australia (once the property appreciates).
Regards
Amit
yes
no – must be in the trustees name
ideally individually as you may be liable if one of them skips town with your money
tax return in india and australia
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Terry, Can you help with setting up a SMSF to buy property overseas. If so, I am happy to give you a call and seek professional advice on the matter.
Is this approach (using SMSF to buy property overseas) used by people and approved by TAX office.
I am a lawyer so can set up trusts and SMSF, but I don't hold a AFSL licence so cannot give financial advice which you would probably need in this situation I think.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Do you and your friends have strong ties with India? Do you and your friends spend a lot of time in India?
A SMSF (trustee and majority of contributing members) must be an Australian resident to receive concessional tax treatment.
Make sure you plan ahead for the possibility that one or more of your friends decides to reside in India.
http://www.cleardocs.com/clearlaw/superannuation/smsf-members-overseas.html
All the three of us are Australian citizens and have a Indian OCI (overseas citizen of India -Like dual citizenship).
We are Indian by background but have now settled in Australia.
We have family (parents) in the city in which are planning to buy the property.
No Loan required – Simply want to buy the property off the plan in India.
Just make sure everyone is aware of the risk.
Tax residency is very different from immigration/citizenship, if everyone plans ahead it should not be an issue, however things can change very quickly.
A disaster would be to have a snap decision that someone was to reside in India (for example, to look after parents or for a new relationship) and either have the SMSF deemed non-complying or being forced to sell assets in a hurry to pay out a non-resident member who is leaving the fund.
Def do not have personal trustees. There is a recent case, Shahail from memory, where husband and wife were trustees. Husband did a runner overseas taking all the super money. Wife only remaining trustee in Australia. She ended up coping a whopping fine for breach of trustee duties and the fund was non copying and taxed at 46.5%.
Also consider residency as Richard mentioned. Even though you may be citizens this is not the same for tax, especially if you decide to live overseas at some stage.
And how is the SMSF going to own the property in India. Can an australian company own land there? Or maybe a nominee company – will this be ok under the funds rules and Australian law? Shares in a trust or units in a company? Would this be permissable? You need specialist advice – which Richard may be able to assist with?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Guys, With no loan requirements – I think this is straightforward.
A) Has anyone set-up an SMSF to buy property overseas – anywhere (say the USA).
Would you recommend any one who can help in this activity (professionally).Regards
Not so straight forward – who will own the property for example?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Meting with my accountant about this very issue next week, will be happy to let you know how this works when there's a tax treaty in place (like in Japan-AUS case).
certainly many countries allow this, even when there's no compelling advantage in such a setup from that country's taxation laws perspective (which is the case in japan, at least until you hit the million dollar portfolio value mark or so) – but may be an advantage from an australian perspective even so, definitely worth investigating.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Ziv, I would be keen know the outcome. I am going to be ringing some accountants myself next week to try and find out who has done this previously. I was told
A) If a person does an individual SMSF then property overseas is in the persons name
Don’t know about situation where 2 or 3 people get together to form the SMSF.A SMSF can have 4 members who could be totally unrelated.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
ankitjain wrote:A) If a person does an individual SMSF then property overseas is in the persons name
It is not possible to have a SMSF with one member who is also trustee. This is because you cannot hold property on trust for yourself so such a trust would fail. (SMSF is a trust).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I would be keen to know the outcome ankitjain..good luck man…
Hi Ankit/Zmagen,
Did you guys have any luck with your discussion with the accountants, please let us know as i am in a very similar position albeit with a smaller balance in my super
Weekdays busy – Had a quick chat with one of the respondents on this forum and they will get back to me latter this week.
Terryw wrote:ankitjain wrote:A) If a person does an individual SMSF then property overseas is in the persons name
It is not possible to have a SMSF with one member who is also trustee. This is because you cannot hold property on trust for yourself so such a trust would fail. (SMSF is a trust).
My wording was a bit vague here.
I should have said it is not people to have a SMSF with just one member who is sole trustee. One member funds with 2 trustees is possible.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
My meeting's next week, will keep you posted.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
General initial advice claims no issue, as long as everybody's aware that properties in a SMSF have to be liquidated for any splits to other funds to be made in future.
meaning, if you split up, careful planning and execution is required.
otherwise, no particular issues noted.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
We would buy three flats off the plan in India.
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