Foreign Property Investment

[jazzlobber]

Hi there, looking for viewers thoughts....

we are moving to aus and thinking about holding onto our home in Ireland and renting out, it would be complicated living on the other side of the planet and managing property here, The economy here is still growing expected to be 6% growth this year, property still in relative boom expected at 8-9% this year - has been doing well here for last 10 years really, interest rates expected to rise but very low compared to aus rates the ECB rate is 2.25% here, standard variable for me is 3.7%

the area is reasonably popular and should get takers and we will likely choose a management company or estate agent to do the donkey work.

I was wondering if its a good idea and if the interest payments and maintenance costs are tax deductable when living in Australia??

I have done a search here but it wasn't clear if interest paid was deductable,

Any other things to watch out for?

cheers

 

[geoffw]

jizzlobber

I was in a similar position some years back.

What I found was that it was difficult to keep the place up to scratch, except that I did not know that at the time. The PM kept telling me how great the place was. When I visited after 8 years (to sell) I was extremely disappointed. The place had deteriorated enormously. The supposedly vigilant PM had not seen the two metre long ivy inside the house, having grown in through the TV arial socket. The tenant had done a botch job of painting.

It wasn't just the unnoticed deterioration which upset me. It was disappointing to see that all the work I had put into the place was for nothing. A lot was just fair wear and tear- but it was a shock all the same.

 

[Panic]

I was wondering if its a good idea and if the interest payments and maintenance costs are tax deductable when living in Australia??


cheers

I keep all my foreign properties. Much better returns then OZ. I fully own them, so I'm not 100% sure if you can claim the deductions.

From what I understand is that you can claim the interest and expenses only if that asset is producing income for you. Now if that property is positively geared then you can choose to report the income to the ATO, realize the deductions and then pay OZ tax on that, or you can chose not to report that income and therefore forfeit the interest deductions, but in that case not pay OZ tax on that income. Do the math...

I'm not sure if this is 100% accurate, so other members are welcome to correct me.

Thx
V

 

[Tikor]

Jizzlobber

If it was a much-loved family home, you might be better off selling, as it will inevitably deteriorate a bit. My wife and I have rented out PPOR properties in several countries after moving on, intending to return (and not doing so). I'm not very sentimental about houses, but the main disappointment for my wife has been that her carefully tended gardens inevitably go to rack and ruin. If you don't want to sell, spend some time and effort getting a good PM and some landlord insurance.

 

[jazzlobber]

we've had the house only about 2.5 years at this point, so i think i would prefer to keep it, allow equity to build up over the next few years, the increase of 8-10% in price this year will add another 30K euro to the value of the house this time next year with the mortgage replayment around 12 -14 K, thats an obvious 16K euro profilt in one year alone,

It would be negative geared with a tenant occupiing probably raise around 10K per year and paying EA and maintenance costs would be financially better position especially including the tax cuts from mortgage interest and maintenance costs.

Also considering property prices quite stagnant on average in melbourne at the moment

cheers for advice

 

[grossreal]

hi jizzlobber
is it in eire or nth ireland not sure if my info is correct but one is a tax haven like jersey if this is the case it adds to its value for you
If I'm right and am not always you need to talk to an international tax agent here or there and structure accordingly.
you have invested in one of the highest growth countries in europe so if you can I'd be holding until the growth levels out and then re evaluate.

 

[jazzlobber]

grossreal,

not sure where you got your info from but ireland is definately no tax haven,

our house is in the republic of ireland about 20km outside Dublin.

I think you are right about holding onto the property until the growth starts to reduce, 8-10% capital growth expected this year.

I believe there is a dual taxation agreement between ireland and australia so it very likely i can pay all my taxes locally in australia when we move there.

will check out the ATO website and see if i can spot anything on this there

wish me luck