Expats with Aussie IPs

[depreciator]

Not sure if this got a mention here when the recent budget came down. We've had a few clients mention it with a degree of sadness recently.

Aussie expats with IPs here will lose the 50% CGT discount for all gains accrued from now on. So they need to get their properties valued - by a valuer, not an agent - NOW. For gains accrued up until now, the 50% CGT discount still applies.

Scott

 

[Rolf Latham]

Yep its a bit rough for

I wonder how much it will earn the a to

Ta
Rolf

 

[shuggy]

More info here:

http://www.exfin.com/australian-budget-2012

Scott, can i employ Depreciator to do valuations or is Herron Todd White better equipped?

Can valuations be back dated to 7.30pm, May 8th 2012?

Are valuations done to create a benchmark similar to the 6yr PPOR rule, i.e. CGT is calculated pro rata between the end of the 6yr period and the date it's sold?

Example, if i sold an IP in 2015 do i receive the 50% CGT discount up until May 8th 2012 (valuation date) and then i pay 100% CGT for the period between May 8th and the date property is sold?

 

[depreciator]

We don't do valuations - different skillset altogether.

I usually fear people to Valuation Exchange - or Valex as I think they are these days.

They're a national valuation group.

We're still in May - I doubt whether prices have moved in the last fortnight so don't worry about that. I would do it in the next month or so, though.

Your example is how I understand things to be.

Scott

 

[Aaron_C]

I usually fear people to Valuation Exchange - or Valex as I think they are these days.

I fear Valex too. Many a deal has been derailed by them picking a 21 year old grad to value a property when he has absolutely no clue how to do so. I know that was a typo but that's my two cents

 

[Belbo]

I fear Valex too. Many a deal has been derailed by them picking a 21 year old grad to value a property when he has absolutely no clue how to do so. I know that was a typo but that's my two cents

I fear I am in complete agreement. I am fairly sure Valex sent me their high school work experience kid.

 

[JWR]

Well less competition = more for us cheaper.

Labor really are the devil though in all seriousness!

 

[kristaje]

Not sure if this got a mention here when the recent budget came down. We've had a few clients mention it with a degree of sadness recently.

Aussie expats with IPs here will lose the 50% CGT discount for all gains accrued from now on. So they need to get their properties valued - by a valuer, not an agent - NOW. For gains accrued up until now, the 50% CGT discount still applies.

Scott

Hi Scott,

Just wonder if this change applies only to expats or permanent residents too?

Thanks.

 

[depreciator]

Sorry, that should have been 'steer' people to Valex. I suspect with all valuers it gets down in part to the person you get on the day.

I am fairly sure Valex sent me their high school work experience kid.

Years ago the valuation industry tore itself apart competing for business from the banks. They all cut their rates and as a consequence had to cut their costs. And the easiest cost to reduce was staff. There are lots of Depreciation Schedule providers who have gone down a similar path.

Just wonder if this change applies only to expats or permanent residents too?

I'm not sure about the distinction. It's an accountant thing and nothing to do with what we do. I understand it applies to Aussie taxpayers who own IPs here but live overseas. We do a fair bit of work for bankers on the lower north shore in Sydney who head off overseas and rent the flash family home out. Their accountants will be onto this.

 

[kristaje]

Thanks Scott. I've contacted my accountant yesterday, but bit concern now as I feel (from various conversation in the past) that he's not really conversant with the expat issues.

Thanks also to Mr Ploppy for the link. Just wonder if you use this exfin company for advice?

 

[INXS]

I have asked the ATO what happens if the person returns to Australia and becomes an Australian tax resident again. They advised until the legislation is passed they can't give an answer. May be a possible loophole, hopefully.

 

[depreciator]

I'd be getting a val now and then a val on return and tucking them away.

 

[tvadera]

Hi,

Sorry to hijack the thread, but what sort of an impact it would have on the market here?

More prop on the market for sale?

 

[joeExpat]

What if there is no valuation would the rates be pro-rated over the ownership period ?
If so it would only be beneficial using a valuation now if you think growth rates in the future will be less than in the past. A pro-rated tax would be less than the two taxes together.

But I guess getting a valuation lets you hedge your bets if you keep it to yourself.

 

[depreciator]

It's not a big deal to get a val. I'd be doing it.

Sorry to hijack the thread, but what sort of an impact it would have on the market here?

Can't see it having much impact at all - the number of properties (and people) affected wouldn't be huge. And it's not as if it's going to make people all of sudden decide to sell the family home they've been renting out.

 

[ozmale42]

Sorry, that should have been 'steer' people to Valex. I suspect with all valuers it gets down in part to the person you get on the day.



Years ago the valuation industry tore itself apart competing for business from the banks. They all cut their rates and as a consequence had to cut their costs. And the easiest cost to reduce was staff. There are lots of Depreciation Schedule providers who have gone down a similar path.



I'm not sure about the distinction. It's an accountant thing and nothing to do with what we do. I understand it applies to Aussie taxpayers who own IPs here but live overseas. We do a fair bit of work for bankers on the lower north shore in Sydney who head off overseas and rent the flash family home out. Their accountants will be onto this.

Probably won't affect them either as most would be exempt under the 6 year CGT exemption rule unless the government has abolished that as well.

 

[DEC]

I understand it applies to Aussie taxpayers who own IPs here but live overseas. We do a fair bit of work for bankers on the lower north shore in Sydney who head off overseas and rent the flash family home out. Their accountants will be onto this.

What about retirees who want to live overseas and sell off an IP every 5 years or so?
Will they get 100% taxed on IP's that they have owned for decades?

 

[ozmale42]

What about retirees who want to live overseas and sell off an IP every 5 years or so?
Will they get 100% taxed on IP's that they have owned for decades?

It seems they will still accrue the 50% discount up to now then lose it going forward for properties owned since 1985

 

[DEC]

It seems they will still accrue the 50% discount up to now

So properties purchased before 2012 gets the discount

then lose it going forward for properties owned since 1985

Lost me there, can you explain that further with a link preferably?

 

[shuggy]

Your example is how I understand things to be.

Thanks Scott, i've also had confirmation from my accountant that the example is also how he understands it. His reply:

At this stage it is just an announcement and not legislation but we can only assume it will get passed by Parliament. The announcement was literally only a couple of lines and doesn’t give much detail so again we can only assume how the system will operate.

The removal of the 50% exemption applies to all gains made after the 8th May regardless of whether it was purchased before this date. Your last paragraph sums it up – you get the 50% exemption up to 8th May and then pay tax on 100% of gain after this date. There are some questions that need to be answered here in certain circumstances but generally that seems to be how it will operate.

It is therefore necessary to obtain a valuation for all relevant properties. The valuation needs to be as at 8th May. The valuation can be done at any point in the future but it needs to be referenced back to this date. I would imagine it would be cheaper to obtain the valuations sooner rather than later as the process would be simpler based on current comparison sales without the need to go back historically to compare sales etc.

So short answer is yes the exemption seems like it will go and a valuation will be required.

Thanks also to Mr Ploppy for the link. Just wonder if you use this exfin company for advice?

I personally don't use them but I have friends in Hong Kong who do.

Just wonder if this change applies only to expats or permanent residents too?

I think it applys to Aussies who are non-residents for tax purposes.
To be considered an Oz resident for tax purposes you need to reside in Oz for at least 183 days of the financial year. The main benefit is claiming the tax free threshold and receiving the lower tax rate of 19% for the first $37,000 of income earned. From an expat point of view, the non-resident tax rates have changed and there is a new combined tax rate of 32.5% applying on the first $80,000 of taxable income with an increase to 33% from July 1, 2015.

So properties purchased before 2012 gets the discount
Lost me there, can you explain that further with a link preferably?

Assuming they've been held for more than 12mths however 100% CGT will apply to any assets purchased after May 8th 2012.

Any asset acquired before September 20th 1985 are known as pre-CGT assets.