PPOR & move to NZ

[whitt]

From: Whittaker Hamilton


Currently Myself and my wife are living here in Australia and have our property up for sale so we can move back to NZ.
It appears it may be take a while to sell as the market has slowed down alot.
I was therefore thinking of my options should i wish to move back and rent it out.

I thought of a strategy but am after advice on if it would work and mean interest is fully tax deductable on my NZ return.

EXAMPLE:
Present place of residence (PPOR) Value $200K Loan $120K
Refinance to a offset account @ 80% Value giving borrowings of 160K in Loan and park 40K ( difference between original loan and new) in the off set account to reduce loan interest.
The 40K in offset account is accessable for a deposit on new PPOR in NZ later down track.
I would plan on getting a valuation done on property before i rented it out to satisfy NZ CGT should we sell down the track.
Also i realise the Aus financial institution would need to be recognised in NZ.


Just an idea to allow us to keep a great property and have access to equity for further purchases.

 

[tonyd]

Reply: 1
From: Tony Dixon



Check out the NZ Inland Revenue Dept site
see http://www.ird.govt.nz/

Look at Q.16 of the IR3 form which asks about overseas income.
http://www.ird.govt.nz/library/returns/current/ir3.pdf

It refers you to pgs35-37 of the tax guide.

http://www.ird.govt.nz/library/returns/current/ir3g.pdf

If your Australian IP makes a profit then (reading between the lines) you seem to have the choice of paying tax in OZ or in NZ and adjusting your NZ tax return accordingly - the ATO may have requirements for non-residents which will dictate which path you need to take.

Less clear is the situation for a loss.

I have vague recollections in the past about NZ investors buying negatively-geared Gold Coast properties and offseting losses against their NZ incomes.

If you can't offset a loss then you can only carry it forward to offset against future profits.

If you can't get a satisfactory answer on this forum then send an email to the IRD. Be prepared to wait a few weeks for a reply.
If you telephone them, be prepared to wait even longer, unless you call the non-resident number.
+64 3 467 7020 (between 9 am and 4.30 pm)


>I would plan on getting a
>valuation done on property
>before i rented it out to
>satisfy NZ CGT should we sell
>down the track.

NZ has no CGT at present. But there may be OZ CGT issues to deal with.

>Also i realise the Aus
>financial institution would
>need to be recognised in NZ.

Should not be a problem.

>Just an idea to allow us to
>keep a great property and have
>access to equity for further
>purchases.

IMHO it is a great idea!

Hope this helps.

cheers, Tony