Getting into IP and moving overseas

[Conor]

I am considering entering into the Australian IP market. However, I'm currently unsure as to if I will be remaining in Australia for the long run (i.e. beyond the next 2-3 years).

I would have no intention of selling an IP if/when I leave Australia and understand the non-resident tax implications of this.

However, are there further considerations I should take into account? For instance, in recent years the UK mortgage market has tightened it's restrictions on lending to non-residents (resulting in much worse lender rates), and the last thing I want is to be stung with significant interest rates on an IP mortgage if I'm no longer a resident here.

Is anyone able to advise:

1. If entering into the IP market is sensible, given leaving may be on the cards?
2. If I do, are there any other caveats to be aware of should I leave Australia a few years from now?

Cheers,

Conor

 

[Peter_Tersteeg]

Most lenders do adjust the bar a little for ex-pats, but they're fairly reasonable and logical about it.

* Interest rates are the same.

* Most lenders won't allow ex-pats to borrow more than 80%, but there are a couple of exceptions that will fund up to 90% in certain circumstances (usually just means it's got to be a strong deal).

* Some lenders will have currency restrictions. UK Pounds and USD aren't a problem at all, neither are most Asian currencies. But let's face it, bank's aren't going to be comfortable if your income is in Zimbabwe Dollars.

* There's a legal process involved in buying a house, and lawyers still insist on paper and ink. A lot can be done electronically but you've got to allow some extra time for things to be delivered via snail mail.

Overall Australia has a very stable property market. There are plenty of examples showing we're more expensive than most of the world, but there's no crash on the horizon either. There's a lot of good reasons to be investing here, even from overseas.

 

[superAndrew]

If you are not a permanent resident and it's an IP:

- You can only buy new dwellings
- You will be charged 32.5% tax for 0 - $80k income I think if it generates income.

Andrew

 

[D.T.]

- You can only buy new dwellings

Andrew

If you read his post, you'll he's not talking about buying IPs from overseas. He's talking about buying them here and then exiting.

 

[Peter_Tersteeg]

If you are not a permanent resident and it's an IP:

- You can only buy new dwellings
- You will be charged 32.5% tax for 0 - $80k income I think if it generates income.

Andrew

I'm not going to touch the tax stuff, but if you hold an Australian or NZ passport you can buy established property, even if you never intend to return.

 

[superAndrew]

If you read his post, you'll he's not talking about buying IPs from overseas. He's talking about buying them here and then exiting.

It doesn't matter if he is overseas or here. If he is not a permanent resident then he can't buy established IP's. He can buy an established dwelling if he lives in it but has to sell it when he leaves Australia.

 

[starter]

I'm not going to touch the tax stuff, but if you hold an Australian or NZ passport you can buy established property, even if you never intend to return.

Peter is absolutely right. I moved overseas for work 3 years ago and we're not considered resident anymore for tax purposes but no trouble buying existing. Loans also are manageable even at 90lvr with the right broker who knows what they're doing. Wasted a lot of time and have some trapped equity by using a broker who is no longer on this forum but should be clear sailing going forward now.

Conor, have a chat to Shahin, he's handling our loans now and we've had no issues going to 90lvr.

 

[Kinnon Bell]

It doesn't matter if he is overseas or here. If he is not a permanent resident then he can't buy established IP's. He can buy an established dwelling if he lives in it but has to sell it when he leaves Australia.

To add a bit more detail to the above statement... it can be an existing dwelling if the property is uninhabitable and needs to be redeveloped, dwellings built on vacant land and dwellings built as part of a redevelopment (that is, to demolish the existing dwelling and build new properties), can be rented.

 

[Peter_Tersteeg]

It doesn't matter if he is overseas or here. If he is not a permanent resident then he can't buy established IP's. He can buy an established dwelling if he lives in it but has to sell it when he leaves Australia.

If you say so, but I've got dozens of ex-pat clients over the last 10 years that have purchased established property whilst living overseas. In their own names, in trusts, you name it. Some of them are currently on this forum at the moment.

Never had a problem with a lender approving the loan, never had to get an FIRB ruling, never received any advice from a solicitor stating there was a problem.

To be fair, I'm not aware that any of them gave up their Australian citizenship, but most don't have an address in Australia.

 

[starter]

If you have Australian citizenship you don't have to worry about residency in relation to what properties you can buy.

 

[Conor]

Thanks everyone, I am a permanent resident, but won't be a citizen for another 1.5 years. But it sounds as though, as long as I have > 10% equity in the properties remortgaging shouldn't be an issue, regardless of if I'm here or elsewhere.