Things to Know When Buying Property in the USA Through SMSF
With US properties costing less than Australian ( between 40k – 150k AUD), a lot of people are considering this investing option. If you are already a part of a self-managed super fund and are unsure whether buying property in the USA through an SMSF is possible, there are some things you need to know and take in consideration.
First of all, when buying property in the USA this way, you will need to abide to USA’s laws in order to know how an individual or corporate SMSF trustee can own a piece of land overseas. There are also some requirements regarding the investment strategy of the SMSF like cash flow and liquidity that need to be met.
So, the main issues in oversea property investment through an SMSF revolve around the fact that you will need to abide to the practical laws of that foreign country (in this case USA) in relation to your investment plan as a foreign entity. Being obedient to the laws of the society is the ground rule for becoming a citizen of any foreign country.
In some countries, SMSF trustees cannot own any property under their fund’s name directly. Instead, you must approach this in a indirect way and buy a local entity that will then own the property. This is the LLC way or acquiring property via a Limited Liability Company, where you will control the majority of the shares of the property you bought indirectly, through an LLC. It’s a bit of a complex step which will require the help of a professional financial adviser to get you through it the right way.
You will need additional expert help and assistance for this next step too. If you plan on investing in a US property, know that you need to pay taxes. This means that you may have to pay extra taxes after buying the property. Hiring Local agents to deal with any expenses and maintain your newly-acquired estate in the USA is much more practical instead of doing it all from Australia. The local estate agent will represent the SMSF by opening and running an account for financially managing your property.
One thing you should not forget about is the currency. You should know there are risks like fluctuations and exchange rates if you decide to deal with financial matters with a foreign currency. That’s why your best bet would be to convert any assets into the suitable currency for the particular country.
I hope I helped you even a little bit with this article on a topic that is pretty much complex in all aspects. Buying property in the USA through an SMSF can be mind-boggling. That’s why you need to contact a reliable SMSF professional who will explain you everything you should and want to know regarding this.