Capital Gains Tax query from NZ

W

WebBoard

Guest
From: Juana Atkins


Hi Everyone.

I am selling my investment property in Melbourne and am wondering if the fact that I left Australia to live in NZ a couple of months after I purchased it will make any difference to C.G.T?

I have owned it now for 3 years leaving its management to a property manager.

When I bought it I thought we would be living in Aussie long term but fate decreed otherwise.

I paid $98,000 for it and just received a valuation from Market line saying that it is worth $148,000.

Will I have to pay around $15,000 in tax?

thanks for your time

Juana in NZ
 
Last edited by a moderator:
Reply: 1
From: Dale Gatherum-Goss


Hi!

>I am selling my investment
>property in Melbourne and am
>wondering if the fact that I
>left Australia to live in NZ a
>couple of months after I
>purchased it will make any
>difference to C.G.T?


A lot will depend upon whether you are treated as an Oztralian resident for tax purposes. The answer could make quite a difference.


>I paid $98,000 for it and just
>received a valuation from
>Market line saying that it is
>worth $148,000.
>
>Will I have to pay around
>$15,000 in tax?
>


Assuming you are Oz resident for tax purposes, you will show $50,000 less stamp duty and legal fees to buy the property and less real estate fees and legal fees involved in selling the property.

Let's guess this as $10,000 in costs all up.

This will leave you with a profit of $40,000 and one half of that will be exempt from tax.

Therefore, you will pay tax on $20,000 capital gain at your margin tax rate. Worst case scenario is therefore, $10,000 tax.

However, if you are not a resident of Oztralia for tax purposes, you will pay CGT at a rate of 29% on the $20,000 profit.

I hope that this helps

Dale
 
Last edited by a moderator:
Reply: 2
From: Whittaker Hamilton


Hi Juana
Ok I am in a similar boat moving back to NZ leaving my house here to rent( well maybe if it doesn't sell quickly).
Have spoken to my accountant in NZ on this issue in the last few weeks in case we ever decide to sell.
I will be a NZ resident and claiming the property on my NZ return. That way i can claim depriciation, mortgage interest etc.. as if the rental property was in NZ.
On selling if it sells for more than my adjusted tax value on my tax return. I am required to make an adjustment on my nz return for any gains ( pg 101 NZ IR260 Depriciation guide)incurred.

This all is if you are a NZ resident filing it on your NZ return.

Any further questions drop me a line
 
Last edited by a moderator:
Reply: 1.1
From: Owen .


That's funny Dale. I have 2 nephews in NZ and one of them asked me a while ago if I live in Australia or Oztralia?

He has an excuse though as he is only 7!!!

Owen

"Gambling promises the poor what property performs for the rich – something for nothing"
 
Last edited by a moderator:
Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Owen!

That's OK, it has been said before that I act like a 7 year old.

Have fun

Dale
 
Last edited by a moderator:
Reply: 3
From: Terry Mc


Hi Juana. My understanding is that there
is no Capital Gains tax in NZ. If you are a
NZ resident why would you be liable
(except possibly for the first 3 months)?
Terry Mc
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 4
From: Stephen Burman


I looked at this some time ago myself and I believe the answer is that you may well be up for Australian Tax. While you may well be resident in NZ now it's also a factor whether you were regarded as resident in Australia at the time you were here. This is unfortunately not necessarily a simple manner as you can live here and not be resident. Look at this page for more details

http://www.ato.gov.au/content.asp?doc=/content/individuals/12503.htm&bn=AS/IN/PC/PC02/A

If you were resident and then leave with the intent of not coming back the regulation on CGT actually says you are assessed as if you had sold that asset at the time you left Australia. Many people conveniently forget this.

Here is the link for this

http://www.ato.gov.au/content.asp?doc=/content/Individuals/22313.htm&page=16#H256

Sorry to have to tell you this,

Steve B
 
Last edited by a moderator:
Top