Written

For

The

Australian

-

SMSF

investors

eye

overseas

property

after

budget

lending

ban

Ban property lending inside super? Fine, say Australia's most determined SMSF investors — we'll just buy a villa in Sicily instead.

The Albanese government's ban on residential property lending inside SMSFs was meant to cool the sector's appetite for bricks and mortar. Instead, from what I'm seeing, it's simply redirected the hunt. Trustees who can no longer gear into an Australian house are now looking at Aussie commercial property — and increasingly, at overseas markets where cash purchases are within reach.

The numbers tell the story. Around a quarter of SMSF assets sit in property, but less than 2 per cent is offshore. That figure hasn't budged in five years, but I think it's about to.

Why? Because $300,000 doesn't buy much in Sydney, but overseas it stretches remarkably far — a ski house in Japan, a colonial home in Mexico, sea-view flats in Georgia, or that Sicilian villa. Buyer's agent Kitty Parker recently picked up a New Zealand commercial property for under $67,000 with a 23 per cent gross yield. Try finding that in Parramatta.

But here's where I urge caution. Buying overseas in your SMSF is not a weekend hobby. Your trust deed and investment strategy must permit it. The sole purpose test still applies — meaning no family holidays in your Tuscan farmhouse. Related party rules mean your cousin can't rent your Greek unit. Break these and the ATO won't care how charming the olive trees are.

Then there's the practical mess: different time zones, currencies, languages, tenancy laws and tax regimes. Multiply every headache of a domestic investment property by ten.

My concern is that unfamiliarity breeds losses. Slick agents will push overpriced off-the-plan stock in overdeveloped areas dressed up as "opportunity." If you're serious about offshore SMSF property, engage an independent buyer's agent who works for you — not the developer.