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Aussie expat: sell my PPOR and buy new PPOR while still OS

Discussion in 'Accounting & Tax' started by James Hill, 29th Aug, 2016.

  1. James Hill

    James Hill Active Member

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    Hi All! (sorry for the long post)

    I have been working abroad for a few years and am a non-resident for tax. Currently renting out the PPOR in nsw for last 4yrs. No other properties or Aus income. Our plan is to move back to Aus in about 3yrs. Have not bought any properties overseas.

    While still overseas:
    We want to sell the nsw PPOR before it reaches 6yrs to stay exempt for CGT.
    With the cash we then want to buy a cheaper PPOR in vic and an IP unit in nsw hopefully at same time and try and get all this in place before we move back.

    My question is if there is any tax issues in the order we buy the PPOR or IP?
    Also we will only lease out the nsw IP and the vic PPOR will be empty waiting for us to move in. Will we be liable for any Land tax or CGT on the vic PPOR if we take too long to move back? I assume no CGT as it won't be leased, but maybe vic land tax if kept empty?

    Also does anyone know of any professional services that can sign sale and purchase contracts for us and take care of that for us whilst we are overseas or is it better to just fly back on those days to sign contracts in person?

    Many thanks for your thought all !
     
  2. ellejay

    ellejay Well-Known Member

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    Are you liable for tax on the sale of the existing ip in nsw in the country where you are currently tax resident?
     
  3. ellejay

    ellejay Well-Known Member

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    Also, whilst buying an ip unseen via a ba is fine the criteria for a ppor is unique to yourself. What if you arrive and find you don't like it? I'd hold off on ppor purchase until you're on the ground and have time for a few visits to check out issues such as noise, sunlight etc that may not be apparent straight away.
     
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  4. James Hill

    James Hill Active Member

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    Hi Ellejay

    Thanks for your thoughts.
    No the selling of the nsw PPOR would not liable for tax in NZ - where I am working

    Yes I agree with you, we would be flying to Aus to choose the new properties ourselves, but just wanted to employ the services of someone to "sign" for us to avoid having to return again for that.
    I am thinking a solicitor could "sign" in our absence?
     
  5. Starbright

    Starbright Active Member

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    If your PPOR is over $2m, you may also need to withhold 10% as a foreign seller? Not sure if it applies to citizens, please check.
     
  6. James Hill

    James Hill Active Member

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    Hi Starbright thanks!, I believe that is only for non-citizens - but I could be wrong, anyways our PPOR will sold for less than 2mill
     
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  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes, many issues to consider tax and otherwise.
     
  8. James Hill

    James Hill Active Member

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    Thanks Terry! If you have time please feel free to share what issues/complications you see that I should take to my accountant for further advice
     
  9. Sticks

    Sticks Member

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    James, we are currently based o/s also and recently purchased an IP, we did not fly back to sign documents, managed it all via scanning and sending originals via the mail. If this does not work, you could consider is setting up a power of attorney for purposes of signing these docs, this does not need to be professional services, but a family member or friend. If you wanted to keep this seperate a professional service such as buyers agent buyers i am sure could perform this for you for a fee, however once you factor in costs to setup power of attorney and service fee charges it might not be worth it compared to paying for a flight.

    A few other things to consider
    1. We needed to go to the Australian consulate overseas to get documents witnessed, both for mortgage, conveyancing (to prove we were 'real' person), in addition to a few Skype calls
    2. One parcel got lost I the mail so spent a bit of time tracing, and needing to get resent. Did not delay anything however caused a bit of stress.

    Good luck.
     
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  10. James Hill

    James Hill Active Member

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    Hi Sticks
    Thanks very much for sharing, thats great to know yes we might try and do it via mail and scanning also. Cheers!

    Anyone know of the top of their head about if I'll be liable for land tax on the vic PPOR (will be just in my wife and my name) if we take too long to move back, I tried to dig into the vic sro website but couldn't track the info down yet. Thanks!!!
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You should be talking to a lawyer about
    - stamp duty
    - land tax
    - asset protection issues

    and your accountant or lawyer about
    - deductibility of interest
    and tax matters

    As one small example
    - how to structure the ownership of the main residence
    - how to fund the ownership of the main residence

    If you are keep on asset protection you could buy the property in the name of you or the spouse - whoever is least at risk of litigation. But you could strengthen the asset protection by gifting the money to a discretionary trust and the borrowing the money back from the trust with the trustee taking a first registered mortgage over the property. A double lawyer of asset protection there.

    This may or may not suit your situation so don't implement without legal advice.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I should add that there will be complications with this if you are a non resident.
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    See s 56 Duties Act
    LAND TAX ACT 2005 - SECT 56 Absence from principal place of residence
     
  14. Blacky

    Blacky Well-Known Member

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    As @terryw states there are many issues to consider with your plans.

    Firstly your definition of 'ppor' is flawed. You can be a non-resident for tax and have a 'ppor' the two are mutually exclusive.
    Also if you sell your current property while still a non-resident you will not have any cgt discount for the period you have been a non-resident for.
    If you buy a 'ppor' even if you are still overseas you may be deemed to now be a resident for tax purposes and therefore liable for any foreign earned income.

    You need specific advice from an accountant/lawyer proffecient in the non-resident taxation debacle.

    Blacky

    *take the above with caution. I'm not an accountant not qualified in any way. The above may be wrong and/misleading.
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you don't move into a property you cannot be absent and claim the CGT exemption - for either income tax or land tax.
     
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  16. Sticks

    Sticks Member

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    I agree with what Terry and Blacky have said, it is best to talk with your accountant and lawyer to understand the implications of selling and buying whilst a non resident.

    They will be able to tell you the implications of different choices and also provide advise on best approach for your circumstances. Is a small price to pay upfront to ensure you are not going to impact your long term interests.
     
  17. ellejay

    ellejay Well-Known Member

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    You definitely need to speak to an accountant who understands international tax issues. We're going back to nz next year and I was advised we'd need to remain Aus tax residents while there or a cgt event would be triggered on our aus ips. Paul at PFI on this forum advises us.
     
  18. James Hill

    James Hill Active Member

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    Very interesting indeed, thanks all for the suggestions for discussion. Exactly the kind of info I needed to do to get familiar with in prep for further meetings with my accountant. Great stuff!!!
     
    ellejay likes this.
  19. MSD

    MSD Member

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    Hi @Sticks, how long was your settlement? I'm curious to know how much longer to factor in when purchasing while based overseas. Thanks
     
  20. Sticks

    Sticks Member

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    Hi @MSD, settlement was 7 weeks, this was plenty of time assuming no lost mail, it got a bit tight for us at one stage due to misplaced mail (lost just over a week chasing mail), this made it a bit tight at the end, but still had everything all in place a week prior.
     
    MSD likes this.