Buying in/moving to NZ

[NearlyNZ]

Hi

My first post here so I will probably be more in depth than needed.

My wife and I have a house and an IP in Canberra, but are looking at moving to NZ (for a few years) next year.

We have a lot of questions that we need answers to but are unsure where to go (short of an accountant).

We are not being transferred for work or anything so we will not be getting paid in any sort of AU$$'s, nor will we have any aussie income except for the IP and our house which will become another IP.

Does anyone know if we will still be eligible for any tax breaks etc on these properties? will we have to pay tax on them in NZ and here?

Also, we will probably be looking at buying a property to live in over there. Is it best to do that before we leave with a loan from here or can we get a loan over there etc?

If anyone has gone through a similar situation as we are contemplating we would love to hear any advice or links to sites that may help.

At the moment our move is only for a few years but who knows how long it may end up being.

I forgot to mention that my wife is NZ national and I am AU national, if that makes any difference in any way.

Thanks for any help.

 

[MarkB]

I'm an Australian living in NZ. I own negatively geared property in Australia as well as some over here.

Move to NZ for work and you'll effectively be a NZ resident for tax purposes. That being the case you'll be able to claim your negatively geared Australian IP against your NZ PAYE.

To do this (as well as claim on my negatively geared NZ IPs) I fill in this form - IR23BS - and submit it to the NZ IRD (it's the NZ equivalent of what Australian's call an "income tax withholding variation").

NB - the property I hold in Australia makes a loss so, atm, I pay no tax in Australia. If your Australian property makes a profit, you'll have to pay tax on that (but before you swear, afaik there is a double-taxation agreement between NZ and Australia).

Re: buying a property in NZ. As an Australian you won't have any issues, since you're equivalent to a permanent resident from day 1 (if you travelled on a british passport, that'd be different). So my advice would be look for and finance property when you're already over here. Also, I afaik, Australian banks wont take a mortgage over NZ real estate.

A few other things:

• You'll have to do tax returns in both countries
• NZ and Australia have different tax years. In NZ the FY begins on 1 April, not 1 July as in Australia.
• Different countries = different depreciation rules
• If, in Australia, you bank with a bank that doesn't do business in NZ, you'll have to pay some tax on that (doesn't affect me as I bank with ANZ in Australia)

Re: your wife being a NZ national. Mine is too. We've yet to see any advantage from a property point of view.

M

 

[geoffw]

Move to NZ for work and you'll effectively be a NZ resident for tax purposes. That being the case you'll be able to claim your negatively geared Australian IP against your NZ PAYE.

It may be worth while to get advice on this.

When I returned to Australia after several years in England many years ago, ATO asked me why I should not have been considered an Australian resident for tax purposes. Having married overseas, not having a house back in Australia, helped.

That was a different time in a different country. But it may be worth talking to ATO and a professional.

 

[poperr]

I have just sold my property in NZ (I am Australian). Fortunately got a reasonable price for it (a 10% profit in the 2 years) considering what has happened in the last 6 months.

Prices have crashed in many parts of Auckland, particuarly apartments, dropping 30% +. It is actually a good time to buy, however be careful with what the current value is.

Also I was able to get a GST refund on purchase being a Non NZ citizen, which meant around 11% of the purchase price which was about 28k!!!.. THis may apply to you as well.

 

[NearlyNZ]

• You'll have to do tax returns in both countries
• NZ and Australia have different tax years. In NZ the FY begins on 1 April, not 1 July as in Australia.
• Different countries = different depreciation rules
• If, in Australia, you bank with a bank that doesn't do business in NZ, you'll have to pay some tax on that (doesn't affect me as I bank with ANZ in Australia)

Thanks Mark

There are a few points there I will chase up. The property we have here wont be positively geared so I'm going to have to sort that out too.

Also thanks to geoffw, Mark_B and poperr for the info. We are looking at Christchurch so I will be checking out the property values very carefully. My mother in law is a real estate agent there so I should get a lot of help in that area.

If my houses here are still negatively geared to I get any tax breaks apart from wiping out the tax payable? (if there are any extra benefits to be had?)

We are still new to all this investing, and now want to go complicate things 10 fold! amazing what we do for family isnt it.

 

[NearlyNZ]

Me again.

I gues the main thing that worries us in this venture is that we will have 2 IP's in Canberra, but virtually nothing when we move to Chch. We would love to buy a house there but I dont know if we will be able to use any of the equity we have in these places?

I assume that as we are in a different country and not refinancing all the properties with an NZ bank they wont take the equity we have ito consideration.

We dont have jobs as yet. All we have there is family, so I guess we will be starting from scratch like everyone else.

 

[geoffw]

I gues the main thing that worries us in this venture is that we will have 2 IP's in Canberra, but virtually nothing when we move to Chch. We would love to buy a house there but I dont know if we will be able to use any of the equity we have in these places?

I would be arranging a Line of Credit against your ACT properties well before you go- and using the funds from that as a deposit for a property in NZ. If that's where your due diligence is suggesting is a good place to invest. (I know nothing about the NZ market).

 

[GreenTreeFrog]

Where in Chch are you looking at buying? We have lived there off and on over the last three years. LOVE Chch and are very sad to not be returning this coming winter.

 

[NearlyNZ]

Where in Chch are you looking at buying?

I'm not really sure to tell the truth. I am trusting my wifes judgement.

She has mentioned burnside, avonhead, casebrook and bishopdale though.

 

[NearlyNZ]

I would be arranging a Line of Credit against your ACT properties well before you go- and using the funds from that as a deposit for a property in NZ.

I like this idea and would probably have never thought of it!

I think if we bought anything over there we would just buy it as an investment, fix the loan (IO) and then live in it.

Much like we did when we moved from sydney to here.

 

[Muffinman]

Mark_B this is a little off topic but do you know if there is much difference between auctioneering process in NZ compared to say Australia QLD act?
And to obtain a NZ auctioneers license or any info who would one need to speak to?
I've done a search and found very little, and was wondering if it was possible to just do an update/refresher on such a license to obtain an NZ auctioneers license.

 

[MarkB]

Also I was able to get a GST refund on purchase being a Non NZ citizen, which meant around 11% of the purchase price which was about 28k!!!.. THis may apply to you as well.

I'm not a NZ citizen either, but of all the properties I have bought, it is only those in GST registered entities on which I have got the refund.

I suspect if you did get the refund, it was because you weren't a NZ tax resident (not because you weren't a NZ citizen).

That being said, if you claimed the GST on purchase, I am a little surprised the NZ Government didn't ask you to remit the GST back on sale.

If my houses here are still negatively geared to I get any tax breaks apart from wiping out the tax payable? (if there are any extra benefits to be had?)

Well your NZ PAYE will be reduced (the same advantage as if you were back in Australia).

Plus, as I understand it, (if all you have is negatively geared IPs in Australia) you accumulate tax losses in Australia which can then be used to offset future income in Australia.

...do you know if there is much difference between auctioneering process in NZ compared to say Australia QLD act?

Short answer is, I don't know the answer about any differences.

The Real Estate Institute of NZ website may help though.


M

 

[NearlyNZ]

More on this...

I am wondering if anyone knows how we would go about changing my (currently) family home into an IP while we are gone?

Do we have to refinance the loan to an invesment loan?

Is there any major things we have to do?

Thanks