Complicated Tax Issue need your help guys

[DanielN]

Hey guys, i purchased a property in 2002 as my principle residence although i was living in the US. I was working there however my partner was not, i was on a temp visa but had yet to achieve my green card status which happened in sept 04. I intended to live in the property when i returned but our circumstances changed and the property was sold and settled on the 31/1/08
What are the CGT implications on this?
I must add that we havnt filed a australian tax return since 99 year + incme from rent and expenses on the property in australia , i declared the income + expenses on my american tax return

Thanks in advance lads..!

 

[alexlee]

Hey guys, i purchased a property in 2002 as my principle residence although i was living in the US. I was working there however my partner was not, i was on a temp visa but had yet to achieve my green card status which happened in sept 04. I intended to live in the property when i returned but our circumstances changed and the property was sold and settled on the 31/1/08

Usually the 6 year rule applies, but you've never lived in it, so that's very hard to justify. Based on this, I would say full CG, no exemptions.

I must add that we havnt filed a australian tax return since 99 year + incme from rent and expenses on the property in australia , i declared the income + expenses on my american tax return

Uh, even if you're non-resident, you still have to do an Australian return if you have Australian sourced income, no?
Alex

 

[JoyBoy]

Uh, even if you're non-resident, you still have to do an Australian return if you have Australian sourced income, no?
Alex

That is correct. Non-residents are taxed on all Australian source income. Rent from an Australian property would therefore be regarded as Australian source income.

You may have to ammend some of ur US tax returns and lodge an Australian Tax return for years were rent income was not declared

 

[skater]

I would strongly suggest you speak to an Australian accountant who knows all the ins & outs of investments for ex-pats.

 

[RetireEarly]

Speak to an account ASAP you will find that you will need to submit tax returns for all those years... I have just gone through this and it was quite difficult with all the back tracking through historical records.

 

[ggumpshots]

Most accountants wont be able to help you . You need a specialist and it will cost you double heaps. Get a price before you proceed.

However first Get the tax office to ring you in the states. Ring the sydney ATO operator then and they will ring you back. Under no circumstances should you speak to a front line grunt. I beg you, don't do that you will get misled and be misinformed and they wont have been trained properly. The specialists are really good

I believe Alexee is correct in all his points. If you haven't lived in the place its not a PPR.
Better to come back and be a resident for a while rather than pay the extra tax at overseas rates if you can. that's my plan.
My error ......have you retuned to Melb?

 

[MattR]

Not all non-residents who earn Aust income need lodge an Oz tax return, eg. if all they earn is unfranked dividends and interest and the payer withholds tax at the appropriate rate then no return necessary.

In this instance the 6 year rule won't help as you did not occupy the house before using it to earn income, ie you did not establish it as your PPOR.

If you do your old returns then you may have some carried forward losses to offset the capital gains. With the 50% discount, perhaps CGT may not be too bad.

And...yes be careful if you speak with the evil empire, don't give them your TFN etc, just ask generic questions.

 

[ggumpshots]

Not all non-residents who earn Aust income need lodge an Oz tax return, eg. if all they earn is unfranked dividends and interest and the payer withholds tax at the appropriate rate then no return necessary.

In this instance the 6 year rule won't help as you did not occupy the house before using it to earn income, ie you did not establish it as your PPOR.

If you do your old returns then you may have some carried forward losses to offset the capital gains. With the 50% discount, perhaps CGT may not be too bad.

And...yes be careful if you speak with the evil empire, don't give them your TFN etc, just ask generic questions.

Spot on MattR
Franked dividends are also treated the same as unfranked , but you loose the franking benefit