Buying property in Turkey using SMSF

Discussion in 'Accounting & Tax' started by SMSinvestor, 13th Nov, 2015.

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  1. SMSinvestor

    SMSinvestor New Member

    13th Nov, 2015
    I'm new to this forum, and to property investing in general to be honest. I'd like to set up a SMSF and buy an investment property in Turkey (my partner is Turkish). I have enough $$ to buy something there without having to borrow from a bank, but my accountant quoted me a ridiculous amount of money to manage the SMSF every year ($4k). Apparently an accountant needs to do the figures first and then they have to be checked by an auditor before being lodged with ATO.

    I fail to understand how it can cost this much when all the hard work will be done already. All receipts etc will already have been translated into English, and my book keeper will already have done the figures before giving to the accountant so it's merely a formality him checking and signing off on everything.

    Can anyone suggest a more reasonable/SMSF-friendly accountant I could use - preferably one that isn't going to try and talk me out of buying property in Turkey. We've done a lot of research into the area we want to invest in, we know the rental return won't be great, but capital growth is what we're looking for.

    I live in Brisbane but I'm happy to work with an accountant outside Brisbane if they're an expert in this field. Any help/advice you guys can offer would be greatly appreciated!
    WattleIdo likes this.
  2. George Poullos

    George Poullos Finance Strategist Business Member

    24th Jun, 2015
    I have PM'd you with someone who may be able to help. :)
  3. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    18th Jun, 2015
    You might want to get some good legal advice too before causing the SMSF to invest overseas as there are many issues.
  4. VATI

    VATI New Member

    13th Nov, 2015
    Checkout esuperfund - simple, cheap, all compliance and audit and tax done quick. A smsf is not a difficult thing if you stick to the rules.

    But for your proposed property purchase, definitely get specialist legal advice (not financial planner or accountant) before investing as it may be a very costly mistake.
  5. cdchi1

    cdchi1 Well-Known Member

    12th Oct, 2015
    I know you said you didn't want to get talked out of buying in Turkey, and the following is not intended to do that. I love Turkey, spent two months there and can't wait to go back. The following is just a discussion to determine whether an SMSF might actually be the best vehicle for this as there are lots of potential issues as someone else suggested.

    Some examples of issues you (with a lawyer - more cost) need to consider and/or may experience:

    - sole purpose test (dont use the property for a holiday, don't rent to "related party " at below market rate...etc etc)
    - if this is the only investment of SMSF...need to word trust deed VERY carefully
    - are there laws in the OS country that could result in a breach of SIS Act, for example can the govt impose penalties for breaches of that country's rules
    - will it provide a sufficient income to meet min pension income requirements (should you decide to start an income stream)
    - will partner be a member and trustee, if so, is he/she a resident of Australia or Turkey, if so is control in Australia
    - tax treatment of currency movements (ie converting Turkish currency to AUD, the change from receipt of turkish currency to date of conversion etc)
    - can a foreign entity (not person) actually own property in Turkey? If not, entity in Turkey and o/s bank account has to be asset rules of SISA could be an issue (though unlikely) , and the o/s financial insto needs to comply with OUR banking laws
    - tax implications in idea about Turkey, but if some tax may need to also have an incountry accountant in Turkey to handle
    - what happens if you seperate with your partner...splitting super with an o/s property...NOT FUN!

    These are issues I was aware of back when I was a technical super specialist 5 years ago. Things may have changed so that some of the above are no longer relevant, I haven't paid attention to super space since leaving the profession.
    Terry_w likes this.
  6. Redwood

    Redwood Well-Known Member Business Member

    22nd Jun, 2015
    Hi there -

    E super will not allow foreign property for good reason - they don't earn a $$$ comm and SIS law is complex.

    Some considerations for foreign property include:
    1. Superannuation law is not designed for international property so there are some complexities
    2. Does Turkey allow the SMSF Pty LTd ATF SMSF to be the legal title of the property? You need to prove legal ownership by the smsf, if not, declaration of trust is required
    3. Does Turkey have a bank on the ADI list? if not - you need to keep the SMSF bank balance less than 5% of net assets at all times
    4. Do you need to include a company to own the property in Turkey? if yes, you need to incorporate a company in turkey and choose shareholders....need legal and tax advice in the local jurisdiction
    5. Insurance: who will be insured? needs to be the SMSF
    6. Invoices need to be in SMSF name
    7. Rent: how can you prove rent is to a non-related party? will you have a rental manager?
    8. Need to send $$$ back to AUD account on a regular basis

    Some considerations that the ATO will consider as well as an experienced ASIC registered Auditor. Even if your auditor signs off on it, does not mean the ATO will rely on the audit opinion.

    They are some key reason and our website lists key traps for USA purchases which are similar.

    Its not that simple, generally a structure is required in the country you invest in due to that country not recognising a Australian company and if this happens you have costs in the local country as well as AUS. Further you will have to lodge a tax return in that country that will be supplied to your AUS SMSF accountant prior to lodging your AUS tax return.

    Hope that helps you a little

    Cheers Ivan
  7. Kangabanga

    Kangabanga Well-Known Member

    21st Jun, 2015
    Turkey is not a stable country, located just next to where the action is in the middle east, prospects in next 10 years is not gonna be good. Running a big trade and current account deficit. Foolhardy to be investing your SMSF in that region or country expecting capital gains without a decent rental yield, sounds more like speculation.

    On top of that, Turkey is being run by the ruling AKP islamic party which is pretty facists and Kurdish unfriendly. Tension between them have a high chance of resulting in a "civil war" scenario.

    Smsinvestor I am sure your intended "investment" into Turkey will also raise a few eyebrows should the government catch wind of it. especially with the recent happenings, better becareful with this discussion here I reckon.
    Last edited: 15th Nov, 2015