Aussie Expat tax & investment Strategy !

[Yahoo Serious]

Greetings,

I really need some investment help with strategy for wealth creation in real estate. I am concerned how my situation of no taxable Australian income affects the investment strategy.
I have no assets besides my cash savings or significant super and want to prepare for retirement in about 20 years or sooner.


Any help with the tax and investment strategy would be great and highly appreciated. I have been browsing this forum constantly for last few days and i am starting to get some idea of basics.

I would prefer that rentals cover the loan repayments in case the S#!t hits the fan with employment in asia.

Some details about me:

I am an Australian Citizen, (non resident for tax purposes).
I am early 40s.
I live and work in South East Asia. I have family around the Gold Coast QLD.
I have an Asian Wife with no Australian citizenship yet.
I have no Australian PPOR or other significant assets.
I have been with same employer for 3 years.
I pay no Australian Tax. Tax in the country I work is paid by employer.
I am paid about 8.5k / month.
I have very low expenses and can regularly save 6 k / month.
I have $150 K (USD) already saved to invest.
Money is liquid and only needs to be transferred to Australia.
My credit record is clear.

Thanks

 

[Terry_w]

You should talk to this guy, http://somersoft.com/forums/showthread.php?t=87234
similar situations.

I will be traveling to Vietnane Laos in a few weeks, maybe we can meet up (so I can deduct my trip!).

Will you be coming back to live in Australia?
Perhaps you should just buy property here and just rent it out. Maybe something you would want to live in on your return. You could rent it out in the mean time and let any losses carry forward. These losses can be used to offset future Australian income.

On that income you could afford another property and perhaps a third. Maybe keep some of your cash in the offset to reduce the loss - or maybe keep your cash offshore to build up higher losses and earn higher interest which may be tax free depending on your situation.

BTW, you must be really living it up if you spend more than $2500 in Laos per month. The average salary would be about 10% of this.

 

[virgo]

Expat

Hi Yahoo Serious

I can't really help you on the structuring side of things...but can perhaps share our personal experience...

Like you, hubby was an expat in an Asian country..we were living it up DINK (btw eschew the stereotype ...this Asian wife was "richer" than the hubby when they met ).....

life would have continued if not for a minor irritant.....the sprogs...and it had to be a boy AND the said country had compulsory national service...so mad scramble to come down under....SO BEAR THIS IN MIND..children changes plans!!!!

You did one thing right and that is to marry an Asian wife after all, this is going to be the Asian century...THINK BIG

what hubby and i did was to save a lot while in Asia (gotta love 17% tax rate and 45% super contribution) ; bring it into Australia....educate the kids here ...AND then retire back to Asia (after all who wants to play lawn bowls and RSL....your wife's citizenship and networks will come in VERY useful here...

All the best and enjoy the ride!

 

[K_Raheja]

I do not have any suggestions,...but i am on the other end of the spectrum looking to move to singapore...have been looking at jobsdb and jobstreet ..

 

[virgo]

Swissapore

Hi K,

It will be a good experience and good on your C.V.

If you are young, single , hardworking (actually make that very hardworking), Singapore will suit you.....

Plus we are very multicultural...sounds like you are Indian right?

Gotta warn you...you are expected to work hard and your colleagues will hate you if you leave the office on the dot

They pay well though in terms of net after tax....and if you are single with a degree...they will hound you to get permanent residence as they want your "brains"; better still if you marry a local and settle there....they will welcome you with open arms...

BTW no welfare or pension of any sorts in Singapore : period!

 

[Yahoo Serious]

Hi Terry,
It would be great to catch up. I emailed you my contact and travel dates to see if suitable to your visit. You're right about the lifestyle. I can live very fine on small money. If i was really keen i could save 7.5k+ as my only expenses are accommodation and food/drink on my break. Travel generally increases my spend. For 10 days every month i pretty much travel Asia.

 

[Yahoo Serious]

Hi Virgo,
Good story. The lifestyle in Thai / Laos is very good for a fraction of what it costs in Australia. I recently went to a family wedding in Aus. First trip home in 18 months. Absolutely floored with how (relatively) expensive everything is.

So i am on tax free income with low expenses and now i want to use it wisely to make up for time, when i was barely making ends meet and just surviving.
I plan to be in Asia indefinitely, but cannot be sure 100% about the security of my finances here or even land tenure hence investing in Australia.
I like your advice regarding the education years, return to Australia, claim accrued losses, then return to Asia when appropriate.

Good point about the national service. I will have to remember that. Thanks

 

[K_Raheja]

...
Gotta warn you...you are expected to work hard and your colleagues will hate you if you leave the office on the dot
...

i have heard diff opinions on the work life balance/or rather imbalance.
i don't mind working hard...if i can balance.
but not single...wife + 1 yr old daughter...we will prolly back in Aus b4 she is ready for school...plan is to turbo charge my savings without excessive tax

lets see how it all shapes up

 

[Terry_w]

Hi Terry,
It would be great to catch up. I emailed you my contact and travel dates to see if suitable to your visit. You're right about the lifestyle. I can live very fine on small money. If i was really keen i could save 7.5k+ as my only expenses are accommodation and food/drink on my break. Travel generally increases my spend. For 10 days every month i pretty much travel Asia.

Yahoo, hope to be there late May. I could live in $200 per month in Thailand, and it must be cheaper in Lao

 

[stephenb465]

Expat and love it

Great post
But living on $200 per month (6,000THB) in Thailand Terry w, that’s not living or having a life. You will need more like $1,600aust p/m (50,000)THB and that’s having a good life style, i.e. no cooking which I haven’t done for 6 years now

I’ve been travelling to Thailand for over three years now, love the place, very cheap but exchange rates isn’t going in my favour now days. Have purchased an investment property in Thailand where it has been rented solid for two three years now returning gross 9% and net 7.5%.
However, I still have properties in Australia and plan to purchase more, as I have become a non resident, I pay non resident tax rate but I get away without paying income tax, except from income from IP’s.
So I guess my goal is to purchase positive geared IP, and work on my offset account for savings

I work in the Phillipines and on my break I travel to thailand.

 

[Terry_w]

Great post
But living on $200 per month (6,000THB) in Thailand Terry w, that’s not living or having a life. You will need more like $1,600aust p/m (50,000)THB and that’s having a good life style, i.e. no cooking which I haven’t done for 6 years now

I’ve been travelling to Thailand for over three years now, love the place, very cheap but exchange rates isn’t going in my favour now days. Have purchased an investment property in Thailand where it has been rented solid for two three years now returning gross 9% and net 7.5%.
However, I still have properties in Australia and plan to purchase more, as I have become a non resident, I pay non resident tax rate but I get away without paying income tax, except from income from IP’s.
So I guess my goal is to purchase positive geared IP, and work on my offset account for savings

I work in the Phillipines and on my break I travel to thailand.

Hi Stephen,

$200 is very low and not what I would choose to live on myself (though I have lived on less), but it is what the average Thai would make per month.

 

[stephenb465]

Minimum Wage in Thailand is 300 THB ($10Aust) per day

I guess it depends on what kind of life style one is looking for when one plans to live in Thailand, The cheapest accommodation you can generally get is about 4,000THB per month ($133) that's with fan room only and of very low quality where you pay water and power for the month. You can get road stall meals for a dollar, beer for $1.50 or so, local coffee $1.20 sometime good sometime terrible.

I have meet a few expats that have changed their life style to live in Thailand living on about 800 dollars a month and some even less, I personally couldn't do it, or would want to.


But other expats I know purchase Condos in Thailand and rent them out to other expats that want to retire as older people want to rent and not own. I guess for the “investor”, the benefit to this is that they get to live where they love the life style and have income that is tax free as I'm guessing they don't declare it to the Thi tax department. One in particular I know has three condo and rent them out on short term to holiday makers and he lives on the rental income.

 

[virgo]

Thailand

Hiya Stephen and Terry

I think it also depends on which part of Thailand...Bangkok versus Chiangmai for example

On my last trip a few months ago; met this Aussie chap who ran a little restaurant in the main square...he told me $3-500 gets you a nice apartment or a small house....and that is per month btw....

Food is so cheap it does not bear thinking about

 

[Terry_w]

Yes, region does matter. In Bangkok you would have to pay around 4,000B per month for your own room at the very low end, but out in the regions such as Korat, maybe just 2,000 would do. You could even share with someone else and pay half each

I wouldn't want to live like this myself now, but it is possible. I have a friend living in Pattaya on 30,000B per month, that is just $1000AUD, or $12k per year. He lives in relative luxury with everything he needs.

Imagine if you were of pension age, getting about 80,000B per month from Centrelink.

 

[stephenb465]

Retire and how

Great topic Terry and Virgo
This leads onto how to support yourself if you want to retire in Thailand.
I’m thinking, supported with a general survey of expats living in Chiang mai and Pattaya while I was there, you would live very well on 50,000THB per month ($1,600) Now that about $20,000 per year.

If you have a IP portfolio in Australia that is neutral cash flow, so you miss out on paying income tax and not costing you any funds to hold. Let say you have 1 million dollars worth of property and if it goes up in value by 3%, that’s 30,000 dollars you could pull out to support your retirement per year.
Of course this would have to be set up well advance to your planed retirement such as an offset account.
The positive is that if thing went south living in Thailand, coming back to Australia with an existing portfolio would be attractive instead of some I know that have sold everything to live in Thailand and left nothing in Australia

But then we have the unpredictable interest rate that would throw the numbers about, so of course a safety net would have to be developed such as a share portfolio that can be sold off quickly

Is this a good plan?
Purchasing a couple of Condo's in Thailand would also suppliment the income and keep one active.

Sorry Yahoo Serious, I hope I haven’t hijacked your post

 

[Deuce]

Finally a thread I feel comfortable to contribute too

@Yahoo

Sorry mate I too am just starting into this side of planning as well so I am keen to hear what advice you get. One thing your going to have to be careful of is the exchange rate since being paid in USD is not that great atm with the devaluing.

Some rather personal questions so feel free to ignore them

Is your wife from Laos?
Are you willing to lose all your investments if you were to split? (if laos is like thailand)

It provides a opportunity for your wife if she can buy land, I have a friend (chinese-thai) married to a american-lao wife. He is buying land with a ROI of 10% in laos atm, has 3 farms already and is buying up more every 5 months. So when he retires in 10 years he will have a passive income of around 40k AUD a year from his farm land. With 150k you should be able to buy your wife a fair size of profitable land.

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My situation is I live in Thailand and work in Oz, when I was doing my research on moving to WA I worked out pretty quickly that I would be throwing away a lot of money trying to live in Perth. My current lifestyle is costing me 46k a year and I am saving about 60k at the current rate this year. Funny thing is I going to spend close to $20,000 on air fares alone this year but when you subtract the costs of owning a car and renting a small apartment somewhere close to the airport every thing starts adding up to a lot of money for 1 week a month.

There are a lot of Ex-pats that retired from the UK when they were getting 70:1 now that has dropped down to 43:1 they are really feeling the crunch because they didn't plan for it. Indexed pensions are great till you add exchange rates into the mix.


@Stephanb465

As for buying condo's I would stay out of Bangkok with the theory its going to be underwater in 10 years at the current rate of sea rising. A lot of Bangkokoidians(the rich) are buying up condo's(outside bkk) and land like crazy at the moment. As well as the influx of Russians since the visa allowances, add on top of it all the thais just building condo's because they can and its not pretty. You would struggle to buy anything in a good location with 150k USD at the moment (I always assumed I would have to pay cash).

Thailand is a extremely hostile place towards outsiders, even if your married to a thai national you still have to prove every year you are capable of being able to take care of them(financially) to be allowed to stay. If your a older person its a touch easier but you still need to report every 90 days to collect your stamp. So while I do love Thailand it is by no means a simple place to live.

------

If I was to live there full-time I would probably live off 90-150k baht so 3-5k AUD a month but that is a non-restricted do whatever I please, fly wherever I wish lifestyle of early finical freedom. At the moment it costs me 3 dollars for breakfast and 30c for a bottle of water. Compared to 15-20 dollars for the same thing here and $2 for a bottle of water. I was spending more money eating at the airport on the way to work then what I would for 6 full meals in thailand.

My goal is to get 100k/pa in 13 years, not because I need 100k/pa as I probably live off less then that. 100k is a buffer for the unforeseen, if SEA exchange rates dropped through the floor I would need a buffer, If my sister was to pass I would need to take care of my nephew, if my family hit finical troubles and needed support. I talk to many Ex-pat that just didn't think things like this could truly ruin their retirement funds. Upside of it tho is if I am earning 100k/pa doing nothing and living off 30k then that is 70k/pa to re-invest into more income producing assets. RIP will be the launching pad, CIP and EFT's will be the heavy hitters at my current knowledge level.

Dream big.

 

[Yahoo Serious]

@ Deuce,
Thanks for your comments

Yes I get paid in USD and waiting for a drop in exchange rate before i get keen on transferring to AUD.

I am also exploring the possibility of similar wealth creation in Laos with property, but not yet confident that I am protected enough with the amount of corruption here.

My wife is Lao National, and i have every confidence that we are 'til death do us part'

Also,the Lao Family Law provides that any assets you take to the marriage belong to you in the event of a breakdown. Any assets accrued during the marriage get split 50-50. So i feel that is pretty reasonable. The $150K I have is pre-marriage assets so i guess that's my insurance policy.

I am interested in how your friend makes money off the farming land? By leasing it out or paying workers to farm it? building houses on it etc.

The price of land in VTE seems to very overheated with many houses and land being much more expensive than you'd pay in Australia. I think that kind of investing is very risky. Other areas very cheap but long way from infrastructure etc and any rent return would be very low.

I would be very interested to hear your friend's strategy.

 

[Deuce]

@ Deuce,
Thanks for your comments

Yes I get paid in USD and waiting for a drop in exchange rate before i get keen on transferring to AUD.
-snip-

I will have to ask him off the top of my head I think he is leasing it. Would seem Lao law is much more friendly to expats then Thai law, sounds like whatever you decide to do you will be happy. If you decided to use your wife's ability to buy land one of the risks could be not fully understanding lao law. My experience with Thai lawyers is overwhelmingly bad due to thai mentality of US vs THEM. I didn't end up doing anything last year because I just couldn't get pass the stability of my options. Maybe I will have to explore Laos as a 2nd option since I don't really like Cambodia.