New Zealand
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mine are in auckland. Good yeilds. as for Cg, time will tell. And lower price level.
Havnt had a problem finding tenants.
As for a 1 mill prop in wellington, not sure what sort of market there would be for that?
how far into it did you look?
As for take on nz going forward ...... people have to live somewhere
cheers
We have three in Wellington. Two one bdrm units bought in 2012 for $156k and $160k (rent $240/wk each), and one 4bdrm house bought in 2003 ($250k), renting $360/wk (but under-rented, should be probably $400+/wk- I have good tenants).
No stamp duty, no cap gains tax (provided you're not a developer and holding for rental income), but as of a couple of years ago, building depreciation no longer deductable (previously had to pay back the depreciation if you sold the property for more that you paid for it anyway, but at best it was like an interest free loan).
Wellington seems easy enough to rent, particularly in the city or close suburbs. Plenty of professional types. I check out properties on trademe.co.nz.
In terms of getting an idea of rents, look at the tenancy website (Ministry of whatever they call themselves these days). They collect and hold bonds, which are based around weekly rent, so will give you an idea of what market rents are in each city: http://www.dbh.govt.nz/market-rent
Personally, I would find it very hard to invest in a place I've never lived in or visit on a frequent basis, but I guess if you have family there they can help out with any issues. Not sure how you would go about raising a mortgage from Australia though.
I doubt you'll get a particularly high yielding residential property for $800-1m in NZ. For that sort of money, I'd rather be buying commercial.
No stamp duty, no cap gains tax (provided you're not a developer and holding for rental income), but as of a couple of years ago, building depreciation no longer deductable (previously had to pay back the depreciation if you sold the property for more that you paid for it anyway, but at best it was like an interest free loan).
Wellington seems easy enough to rent, particularly in the city or close suburbs. Plenty of professional types. I check out properties on trademe.co.nz.
In terms of getting an idea of rents, look at the tenancy website (Ministry of whatever they call themselves these days). They collect and hold bonds, which are based around weekly rent, so will give you an idea of what market rents are in each city: http://www.dbh.govt.nz/market-rent
Personally, I would find it very hard to invest in a place I've never lived in or visit on a frequent basis, but I guess if you have family there they can help out with any issues. Not sure how you would go about raising a mortgage from Australia though.
I doubt you'll get a particularly high yielding residential property for $800-1m in NZ. For that sort of money, I'd rather be buying commercial.
I think the issue for me would be finance although I know you can do it from Australia. I left NZ back in 98 so I'm not really familiar with the demographics and figures but what would concern me is whether there is the economic driver's to stimulate good CG to enable you to leverage off and continue to invest in a sustainable fashion and as fast as you can.....and in this environment that's not guaranteed.
With our property here in Australia we can continue to leverage of our gains. However, there is money to be made in any market and I'm sure people do very well in the NZ market. If you don't receive the CG fast enough you can always learn ways of manufacturing CG of which there are many....
I seem to always think about it though but for me it would have to be a big push into the NZ market similar to Steve McKnight back in the day....
With our property here in Australia we can continue to leverage of our gains. However, there is money to be made in any market and I'm sure people do very well in the NZ market. If you don't receive the CG fast enough you can always learn ways of manufacturing CG of which there are many....
I seem to always think about it though but for me it would have to be a big push into the NZ market similar to Steve McKnight back in the day....
My parents have a 40-50yo 4br , 2 bath, single garage weatherboard property in the Wellington eastern suburb of Miramar (15 mins by car from city and 5 mins to airport) , no views as such but on a flat piece of land with good access (rare in Wellington). Similar properties in the street have sold for $650-$700k so I can understand that Wellington would have plenty above the $1M mark these days - especially in the trendy inner suburbs of Oriental Bay, Thorndon, Wadestown, Kelburn, Mt Victoria and Brooklyn witrh views.
They also own a weekender 3br brick and tile in a beachside suburb 1 hour north of Wellington that they bought for $130k in 1992 . Thats now worth around $300k, so the growth hasn't been that great.
While NZ has no CGT in place I think you'd still be up for CGT if you're an Australian resident for tax purposes.
I've been seriously looking into buying a cash flow investment in NZ for a few reasons. From what i understand, all taxation takes place in Aus under our rules.
"Fortunately, a double taxation agreement between Australia and New Zealand means that Australians earning rental income from properties in New Zealand only pay tax once ? in Australia. While New Zealand itself has no capital gains tax (CGT), Australian residents must pay CGT on any gains derived from New Zealand-domiciled assets.
?Even though the property is located in New Zealand and earning income there, if you are a resident in Australia for tax purposes you have to account for the income and expenses in your Australian tax return,? says Andrew Clark, principal of accounting firm Clark and Jacobs.
Expenses such as interest incurred on borrowings, depreciation and maintenance expenses relating to investment properties can be offset against rental income received, as is the case in Australia."
http://www.yourmortgage.com.au/article/investment-investing-in-new-zealand-77559.aspx
My understanding is that you pay no stamp duty, though you do pay CGT and are able to claim under our much more generous depreciation rules. I believe that you do have to pay GST to the NZ govt, however, although this is only if you are unable to prove that the main reason for investment was not capital gain.
Now, i'm a novice investor. I have one IP which was my first home that i held on to after buying our second home. This new purchase in NZ will be my first specifically made for investment purposes. What i've gleaned about aus residents purchasing in NZ, seems to conflict with what others have said in this thread. If others with experience in investing in NZ, including those who posted earlier could respond to my thoughts i'd greatly appreciate it as i need confirmation that i understand the issues properly and am not sure if there are any tax issues that i've missed.
Thanks
"Fortunately, a double taxation agreement between Australia and New Zealand means that Australians earning rental income from properties in New Zealand only pay tax once ? in Australia. While New Zealand itself has no capital gains tax (CGT), Australian residents must pay CGT on any gains derived from New Zealand-domiciled assets.
?Even though the property is located in New Zealand and earning income there, if you are a resident in Australia for tax purposes you have to account for the income and expenses in your Australian tax return,? says Andrew Clark, principal of accounting firm Clark and Jacobs.
Expenses such as interest incurred on borrowings, depreciation and maintenance expenses relating to investment properties can be offset against rental income received, as is the case in Australia."
http://www.yourmortgage.com.au/article/investment-investing-in-new-zealand-77559.aspx
My understanding is that you pay no stamp duty, though you do pay CGT and are able to claim under our much more generous depreciation rules. I believe that you do have to pay GST to the NZ govt, however, although this is only if you are unable to prove that the main reason for investment was not capital gain.
Now, i'm a novice investor. I have one IP which was my first home that i held on to after buying our second home. This new purchase in NZ will be my first specifically made for investment purposes. What i've gleaned about aus residents purchasing in NZ, seems to conflict with what others have said in this thread. If others with experience in investing in NZ, including those who posted earlier could respond to my thoughts i'd greatly appreciate it as i need confirmation that i understand the issues properly and am not sure if there are any tax issues that i've missed.
Thanks
From my understanding You are earning nz dollars in nz therefore you pay tax on it in nz as that is where the income is derived.
You also need to declare it in your aus return.
The double tax agreement means that aus will give you tax credits for the tax already paid in nz so that you dont pay tax twice.
You will be using the nz depreciation system not the aus and in nz there is no depreciation on the building anymore.
Hope this helps
P.s you can get the same returns in aus if thats the only reason to invest there?
The no stamp duty bit is handy though.
Cheers
You also need to declare it in your aus return.
The double tax agreement means that aus will give you tax credits for the tax already paid in nz so that you dont pay tax twice.
You will be using the nz depreciation system not the aus and in nz there is no depreciation on the building anymore.
Hope this helps
P.s you can get the same returns in aus if thats the only reason to invest there?
The no stamp duty bit is handy though.
Cheers
Im from NZ and have been considering it recently, i chose my next purchase to be in Australia though and the main reason i steered clear from NZ was the current exchange rates.
I think the property cycle is in a similar stage to australia.
theres certainly many advantages like capital gains, yields as mentioned but personally I'm not going to look at NZ until the NZD drops a bit or the AUD gets stronger. something you may want to think of.
cheers
I think the property cycle is in a similar stage to australia.
theres certainly many advantages like capital gains, yields as mentioned but personally I'm not going to look at NZ until the NZD drops a bit or the AUD gets stronger. something you may want to think of.
cheers
Agree, tax on NZ dollars earned in NZ is paid in NZ and under their tax rules. You declare NZ tax paid on your Aus tax return and get credit.
We too have been looking into an investment property and NZ was one of our options.
We personally love NZ, especially the south island and it is quite possible we may even move there on a permanent basis within the next 5-10 years, if not earlier.
As a result and with that in mind, we were thinking of buying something in the vicinity of $800k (AUD), use it as a rental or a holiday let, then when we are ready move into it.
What do you people with investment properties think of using a property as a holiday let rather than a long term rental?
We are looking at doing this most probably in Dunedin. Queenstown is an option, but probably unlikely since it would be difficult for us to find a job there when we move there permanently.
Our other option is buying something down south of Sydney in the Kiama area with the short and the long term plan being the same as explained above.
What do you guy think would be a wiser and financially more beneficial move?
We personally love NZ, especially the south island and it is quite possible we may even move there on a permanent basis within the next 5-10 years, if not earlier.
As a result and with that in mind, we were thinking of buying something in the vicinity of $800k (AUD), use it as a rental or a holiday let, then when we are ready move into it.
What do you people with investment properties think of using a property as a holiday let rather than a long term rental?
We are looking at doing this most probably in Dunedin. Queenstown is an option, but probably unlikely since it would be difficult for us to find a job there when we move there permanently.
Our other option is buying something down south of Sydney in the Kiama area with the short and the long term plan being the same as explained above.
What do you guy think would be a wiser and financially more beneficial move?
Hi Blair 07,
the likelihood is for NZD to appreciate against AUD. The reason being the AUD rallied hard & sharp against USD while the NZD was much slower.
That's my 2 cents worth.
Another reason is the opening gap between Oz and NZ interest rates. The higher the rate, the likelihood is the higher the currency. Australia doen't look likely to increase rates while NZ has already started on the higher rate track.
Getting funding in NZ is a headache & much more likely why we don't choose to invest there. The LVR is a joke.
KY
the likelihood is for NZD to appreciate against AUD. The reason being the AUD rallied hard & sharp against USD while the NZD was much slower.
That's my 2 cents worth.
Another reason is the opening gap between Oz and NZ interest rates. The higher the rate, the likelihood is the higher the currency. Australia doen't look likely to increase rates while NZ has already started on the higher rate track.
Getting funding in NZ is a headache & much more likely why we don't choose to invest there. The LVR is a joke.
KY
Thanks, i know nothing about currency exchange just that i always thought at historically the AUD traded for about 1.25-1.3 NZD.
I'm not an expert on the Dunedin market but $800k is a lot to spend there on one property. Have you even seen anything on the market for that price? Wages are generally low in NZ so be wary of spending too much as you will have a very limited pool of potential buyers when you come to sell. If you're set on Dunedin I would think you could get two very good properties for that, live in one and rent the other. With that budget I would think you could buy a nice house in Dunedin for a work base as well as a holiday apartment in QT. Depends what you want. If you want to spend that much on one property in NZ I would say Queenstown would be the better option being an International destination there will always be wealthy buyers looking for a holiday pad.
The main investment demographic in dunedin is students. So unless the 800k place has 12 or more bedrooms i would look elsewhere.
Quenstown is very nice and would be bery nice to live but relies heavily on tourism and if you need a job to live there it might be tough going.
Your best bet to get a decent return on a property of that value would be auckland but then you wil Need to weigh up if you want to eventually live there.
Personally i am the belief of not mixing business with pleasure so i would be focusing on the investment potential first then looking for a ppor when you are ready. Maybe the growth of the ip can pay forthe ppor.
Cheers
Quenstown is very nice and would be bery nice to live but relies heavily on tourism and if you need a job to live there it might be tough going.
Your best bet to get a decent return on a property of that value would be auckland but then you wil Need to weigh up if you want to eventually live there.
Personally i am the belief of not mixing business with pleasure so i would be focusing on the investment potential first then looking for a ppor when you are ready. Maybe the growth of the ip can pay forthe ppor.
Cheers
Thanks for the feedback regarding tax, it looks like i miss-read a few things, but i've spoken to a few tax professionals, both here and in NZ and have been set straight on the issue.
Yes, a NZ return must be filed, but if it's negatively geared, then it's a zero net gain. I don't like the idea of hiring another accountant though, i'll have to look into the possibility of compiling my own NZ tax return to save on costs.
I've been told that Aussies can claim on deductions on a foreign investment as per the domestic rules, except that buildings attract 2.5% depreciation after 1992 (rather than 1985 for a domestic property).
This still allows an advantage when purchasing in NZ over kiwi investors as they can't claim on buildings at all.
As for the point made about obtaining finance, i've been talking to a mortgage broker and haven't come across any real hurdles. They do require an 80% LVR, and this means cash as equity from Aus property isn't portable. In may case, looking at sub-$200k properties it's chicken feed, but if you were thinking of buying an $800k property, then that's a different matter.
Yes, a NZ return must be filed, but if it's negatively geared, then it's a zero net gain. I don't like the idea of hiring another accountant though, i'll have to look into the possibility of compiling my own NZ tax return to save on costs.
I've been told that Aussies can claim on deductions on a foreign investment as per the domestic rules, except that buildings attract 2.5% depreciation after 1992 (rather than 1985 for a domestic property).
This still allows an advantage when purchasing in NZ over kiwi investors as they can't claim on buildings at all.
As for the point made about obtaining finance, i've been talking to a mortgage broker and haven't come across any real hurdles. They do require an 80% LVR, and this means cash as equity from Aus property isn't portable. In may case, looking at sub-$200k properties it's chicken feed, but if you were thinking of buying an $800k property, then that's a different matter.
http://www.interest.co.nz/rural-news/69265/westpac-economists-see-combination-weaker-dairy-prices-and-strong-kiwi-dollar-reduc
Heres an interesting link for those considering investing in NZ over Australia.
Although better yields might be easier to find in NZ, with interest rate hikes the yields may not be as good as first seen.
Heres an interesting link for those considering investing in NZ over Australia.
Although better yields might be easier to find in NZ, with interest rate hikes the yields may not be as good as first seen.
