STRATEGY
The intricacies of holding overseas direct property
Direct property is a very popular SMSF asset class, but there are many elements requiring consideration should trustees want to own real estate located overseas, writes Jeff Song.
JEFF SONG is superannuation associate division leader at Townsends Business and Corporate Lawyers.
32 selfmanagedsuper
Armed with the general flexibility in investments and the option of using a limited recourse borrowing arrangement (LRBA), owning real estate in SMSFs has been a popular investment choice for trustees. According to the ATO’s latest statistics from June 2021, direct Australian real estate investment by SMSFs, that is, residential and commercial properties combined, represents around 15 per cent of total net assets held by all SMSFs. Many of these funds would have benefited from
the consistently performing Australian property market. In the residential sector, for example, the weighted average of the eight capital cities Residential Property Price Index rose by 16.8 per cent over the past 12 months, despite the uncertainties presented by the COVID-19 pandemic. In light of this type of performance, we recently have had an increase in the number of inquiries from SMSF trustees on overseas property investment. In a nutshell, it is not prohibited by the Superannuation
