Ok but with an IP that has debt and interested payments, plus rates, insurance etc, say you had a bog standard cash-flow neutral property. Incorporate those costs on the income and you have a net income (rent less expenses) of zero. Doesn't that mean tax free to hold IP's for now? Later on when they become cf+ or are sold for CG then obviously tax starts to bite. But if the job is just for a few yrs then surely its still reasonably attractive to buy a couple and sit on them?
property investment while working overseas
- Thread starter Totaro
- Start date
Ok but with an IP that has debt and interested payments, plus rates, insurance etc, say you had a bog standard cash-flow neutral property. Incorporate those costs on the income and you have a net income (rent less expenses) of zero. Doesn't that mean tax free to hold IP's for now? Later on when they become cf+ or are sold for CG then obviously tax starts to bite. But if the job is just for a few yrs then surely its still reasonably attractive to buy a couple and sit on them?
Getting warmer.
My understanding is that any shares held at the time you cease to be Australian resident are considered to be 'sold' at market rates. You therefore pay any CGT on the profit (or receive a credit for losses) in the year that you depart.
Upon return the shares are considered to be "purchased" from the day you return - and thus this is the "starting value" of the shares for CGT purposes.
Anything which happens between time is, as you say, CGT free.
Again - this is only my understanding of it, and I am not an accountant. So I may be wrong. Seek your own proffesional advice.
Blacky
Well, if you own a tax neutral investment (diff to cf), you dont have any taxable income, so regardless if you are resident or not, your tax will be nill.
If you have a tax loss, as a non-resident this tax loss is carried forward.
If you make a profit, it is taxed at the non-resident rate (roughly 30%).
Tax is tax. If you make money, you cant escape it.
Personally, yes, it remians worthwhile for me to hold property investment in Australia.
I dont know if it is worth someones elses effort? Thats a decision for the individual to make.
Blacky
Of course, thats what I thought, but good to check it out. Thanks Blacky.
Finance from Austria is going to be fairly simple. I expect you'll receive payslips, make sure the income is paid directly into a bank account and keep a copy of your employment contract.
Lenders want a little more than the normal 2 payslips, but if you've got the above it'll be fine.
More generally, what lenders will do in terms of LVR is often dependent on the currency. Easy enough if you're paid in Euro, USD or the Pound. Most major Asian currencies are fine as well (Singapore dollar, Yuan, Yen).
It's fairly easy to borrow 80% but there are a couple of lenders that will go to 90% with some other restrictions. There's also a few lenders that only go to 70%.
The significant consideration for purchasing from overseas is to ensure you've got time to get the logistics done. Having a power or attorney can help, but don't try for 30 day settlements, I'd discourage anything less than 60 days.
Lenders want a little more than the normal 2 payslips, but if you've got the above it'll be fine.
More generally, what lenders will do in terms of LVR is often dependent on the currency. Easy enough if you're paid in Euro, USD or the Pound. Most major Asian currencies are fine as well (Singapore dollar, Yuan, Yen).
It's fairly easy to borrow 80% but there are a couple of lenders that will go to 90% with some other restrictions. There's also a few lenders that only go to 70%.
The significant consideration for purchasing from overseas is to ensure you've got time to get the logistics done. Having a power or attorney can help, but don't try for 30 day settlements, I'd discourage anything less than 60 days.
I think you may be confusing IP's which are 'sold' at market rate once you become a non-resident.
Any shares held before you become a non-resident, and sold (irrespective of status) have to be reported for the gain/loss. But any shares bought and sold during the period you're a non-resident are not taxed. This is an important distinction.
Non-residents can trade ASX shares and they're not taxed on any profits.
It seems to me that Totaro may or may not be a resident for tax purposes. Many posters assume that he will be, but that may not be the case. The ATO likes to keep its fingers in people's pockets for as long as they can.
Many years ago, when I came back from living overseas, I had to prove to the ATO that I was a non resident while away. It helped that I did not have a house in Australia, but that I did have a house in England. And I married and had a child while away.
The link I provided gives a series of questions which can be asked to determine if somebody is a resident or non resident. Owning property in Australia may well be viewed as showing intent to return. It's very worth while getting good advice on this matter- and not even to rely on the answers given by answering those questions. It's even possible that the rules can change- but even without that complication, it should be investigated properly. Do not assume that just living overseas for some years is sufficient in itself.
Many years ago, when I came back from living overseas, I had to prove to the ATO that I was a non resident while away. It helped that I did not have a house in Australia, but that I did have a house in England. And I married and had a child while away.
The link I provided gives a series of questions which can be asked to determine if somebody is a resident or non resident. Owning property in Australia may well be viewed as showing intent to return. It's very worth while getting good advice on this matter- and not even to rely on the answers given by answering those questions. It's even possible that the rules can change- but even without that complication, it should be investigated properly. Do not assume that just living overseas for some years is sufficient in itself.
If you have a tax loss, how long can you carry the tax loss forward for?
Thanks in Advance,
