Using overseas funds to buy a property

Hi all,
Appreciate any guidance.

-My non resident brother plans to invest in an established home in Australia for which he will trabsfer 100k to myself. I am helping him by taking the house in my name and eventually transferring in his name in 2 years once he esides here.

Question -

- Is there any TAX issue/implications for using overseas funds to invest for myself ?
- Would I pay capital gain tax when I trnasfer the house to my brothers name in 2 years?
- Would there be transfer fees ?
- As I personaly have 2 investment properties would it affect me in any means

Sorry if my question is confusing. Appreciate your help.
Melv.
 
Not an accountant or lawyer, so take with salt.


- Is there any TAX issue/implications for using overseas funds to invest for myself ?


Yes property is in your name you would be resposible for any tax liability relating to this property. Income on rent, CGT if sold etc.

- Would I pay capital gain tax when I trnasfer the house to my brothers name in 2 years?

If property increased in value, yes CGT. As you would be selling to him.

- Would there be transfer fees ?

Yes as above. Stamp duty etc over again.

- As I personaly have 2 investment properties would it affect me in any means

Yes it's another property. The property will be in your name, what applies to your current properties will apply the same to this property.
 
quite a number of issues

1. interest withholding tax ?
2. deductibility of interest if not registered for withholding tax and withholding tax not paid
3. is the asset held on bare trust ?
4. if on bare trust is the non resident really holding the property and therefore CGT discount does not apply

lots of complex issues there
 
Hi all,
Appreciate any guidance.

-My non resident brother plans to invest in an established home in Australia for which he will trabsfer 100k to myself. I am helping him by taking the house in my name and eventually transferring in his name in 2 years once he esides here.

Question -

- Is there any TAX issue/implications for using overseas funds to invest for myself ?
- Would I pay capital gain tax when I trnasfer the house to my brothers name in 2 years?
- Would there be transfer fees ?
- As I personaly have 2 investment properties would it affect me in any means

Sorry if my question is confusing. Appreciate your help.
Melv.

Since property will be in your name for 2 years then withholding tax issues or the interest is non-deductible !! Also CGT when its transferred to brother. Also stamp duty.

You are correct that personal ownership will impact your land tax. Depends if its your main residence or if its a IP. State threshold woth checking.

Smarter solution MAY be a unit trust in some states but only if its not a PPOR.

Have you considered a deed of apparent purchaser ?? It may not be something some lenders like but worth discussing with a solicitor in state of acquisition.
 
Thanks guys,
- The property will be on my name and the legal document is just a formality between my brother and myself.
- Can't I sell/transfer the property on the price I purchased to my brother once he is a resident so that there is no CGT only transfer price
- Would interest witholding tax make any difference, as the property is in my name and I am stating that I am borroing funds from my brother (if asked about the funds)
- Is there need for a turst as its just like buying an investment property on my name

Appreciate your support
 
Yes heaps of issues.

Is it a loan or a gift. if loan then all the tax issues
Transfer will be subject to CGT and stamp duty.
Are you acting as trust for him?
breaching the FIRB rules possibly?
What about getting a loan?
Asset protection issues.
 
Thanks Terry,

- What if I treat it as a gift ?
- Why would there be tax issues if I am borrowning funds from my brother to buy a house?
- I am taking an 80% loan
- Didn't understand the asset protection issues ?

What would be the best approach any suggestions ?

Melv.
 
In order to get interest deductions interest must be paid. When interest is paid to a non-resident a deduction hinges on registering for withholding tax. 10% of the interest must be withheld from the non-resident.

Specific advice well worth obtaining. Anti money laundering and anti terrorism reporting will find these transactions and you will have to explain then the joint taskforce and then FIRB may ask questions and so on....
 
Reread your post and The $100K is a payment for services to assist your brother ?? Assessable income and not a gift for love & affection.
 
Thanks Terry,

- What if I treat it as a gift ?
- Why would there be tax issues if I am borrowning funds from my brother to buy a house?
- I am taking an 80% loan
- Didn't understand the asset protection issues ?

What would be the best approach any suggestions ?

Melv.

That is why you should get advice.
 
WHy do you ahve to do the purchase now? Why not just wait till your brother has residency? Why not purchase something he can hold as non resident, like a new home, OTP etc.

Can you investigate holding the property as tenants in common with a non resident?

Perhaps this is something someone else here might be able to confirm.
 
Thanks guys, but this seems more complex that I thought...Will get in touch with HOuse of wealth....Hopefully James can help me out with this.

Thanks all..
 
Hi all,
Appreciate any guidance.

-My non resident brother plans to invest in an established home in Australia for which he will trabsfer 100k to myself. I am helping him by taking the house in my name and eventually transferring in his name in 2 years once he esides here.

Question -

- Is there any TAX issue/implications for using overseas funds to invest for myself ?
- Would I pay capital gain tax when I trnasfer the house to my brothers name in 2 years?
- Would there be transfer fees ?
- As I personaly have 2 investment properties would it affect me in any means

Sorry if my question is confusing. Appreciate your help.
Melv.

Is he an Australian citizen?

If so, then I don't see why you are complicating the matter? Why not let him purchase the property in his own name?

He will need to submit an annual tax return as he will be generating Australian income - and if the property is positively geared he will pay tax at non-resident rates. If negatively geared he will have a tax credit upon his return.

If he is working overseas, he should remain eligible for a loan in Australia. If it is a servicing issue, you may be able to provide a guarantee.

Blacky
 
Back
Top