Own Property Overseas?

Legal Pitfalls Australian Families Must Know
More Wealth, More Complexity

A holiday villa in Tuscany. A flat in Hong Kong. A rental apartment in London.

Many high-income Australian families now hold real estate overseas — whether through migration, family legacy, or global investment. But with multiple countries come multiple legal systems, and that’s where hidden risks begin to surface.

Cross-border estate planning isn’t just for the ultra-rich. It’s essential for any Australian who owns property abroad.

Why Overseas Property Needs Special Planning
Owning real estate in another country raises three critical legal and tax issues:

1. Conflicting Inheritance Laws
Not all countries will follow your Australian will. In jurisdictions like France, Germany, or Italy, forced heirship laws may override your testamentary wishes.

Example: In Italy, you may be legally required to leave a share of your property to your spouse or children — even if your Australian will says otherwise.

2. Double Taxation
Overseas property can be caught in the tax net twice — both in Australia and in the foreign jurisdiction. You may face Australian capital gains tax (CGT) plus inheritance or estate tax overseas, even if the property isn’t sold.

Example: A UK property may trigger both UK inheritance tax and CGT in Australia on death or transfer.

3. Delays and Costs in Probate
Every country has its own probate and legal process. Without proactive planning, your family could face:
• Delays in gaining access to the asset
• Court documents requiring notarisation or translation
• Costs of engaging local lawyers to complete basic tasks

How to Avoid These Pitfalls

Make a Jurisdiction-Specific Will
For significant overseas assets, consider preparing a separate will in that jurisdiction — coordinated with your Australian estate plan — to avoid legal conflict.

Use Holding Structures Carefully
Offshore companies, foundations, or trusts can be helpful, but must be tailored to avoid triggering tax or ATO reporting issues.

Review Tax Residency Rules
Where you — or your entities — are tax resident can affect how and when tax applies, especially for trusts and companies.

Get Advice Before You Buy or Transfer
Planning ahead is far more cost-effective than untangling a cross-border mess after someone passes away.

Case Study

A Melbourne couple owns:
• Their family home in Toorak
• A holiday flat in Singapore (held in the wife’s name)
• A rental apartment in Tokyo (through a legacy family structure)

Their original Australian will covered only domestic assets. After consulting an advisor, they:
• Created a Singapore-specific will
• Reviewed Japan’s inheritance tax laws (which apply to non-resident beneficiaries)
• Began restructuring new assets under a family trust to improve succession and control

________

FAQ

Q: Is my Australian will valid overseas?
A: Sometimes. But in many countries, especially civil law systems, local law may override it due to forced heirship provisions.

Q: Could I be taxed in both countries?
A: Yes. Double taxation is a real risk unless a tax treaty applies — and even then, timing and structure matter.

Q: Should I use a company or trust to hold foreign property?
A: Only after seeking advice. Some structures may lead to unexpected tax or disclosure obligations with the ATO.

Q: I already own property overseas. Is it too late to fix this?
A: Not at all. It’s never too late to integrate foreign assets into a coordinated estate and tax strategy.

(Note: This article contains general information only and does not constitute legal or tax advice. Please consult a qualified professional for personalised advice.)

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