Leaving Australia, should I sell?

Discussion in 'The Buying & Selling Process' started by stockboy, 12th Jan, 2019.

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  1. wylie

    wylie Moderator Staff Member

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    Who is giving advice like that?
     
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  2. stockboy

    stockboy Active Member

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    No one, I'm exaggerating.

    To me it seems like, if I'm going to keep the house it's probably going to be for sentimental or convenience reasons e.g. if we come back, more than gaining a profit from it.
     
  3. Ben_j

    Ben_j Well-Known Member

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    The profit made on it since 2016 doesn’t seem like it’s worthwhile selling yet (considering it’s nearly neutrally geared).

    Unless you need the cash I’d wait until the next cycle to sell.
     
  4. stockboy

    stockboy Active Member

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    Okay, thanks for the advice.

    Guess I have to cross my fingers and hope that the price doesn't continue to fall so I go underwater.
     
  5. Sackie

    Sackie Well-Known Member

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    No one has a crystal ball. Do some DD on the area, growth drivers, current place in the cycle etc then determine on the balance of probabilities how will it perform over the next 10 years.

    All decisions carry risk. Just work out what is most palatable for you according to your goals and risk profile .
     
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  6. Fargo

    Fargo Well-Known Member

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  7. Cimbom

    Cimbom Well-Known Member

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    I presume you don't live in this property? Will you be looking to buy a place to live in the US and do you have cash outside of this property to do that? If you will buy over there and the equity in this property will help you then I would sell. If you're not buying over there then I would consider keeping it more for the convenience element than due to an expectation of large CG.
     
  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I think it will come down to a number of things which are less about Pakenham and it's growth potential and more to do with your own personal situation

    Some things to consider
    - will you remain a resident of Australia for tax purposes?
    - how is land tax treated in Victoria if you are no longer a resident?
    - could you redeploy the money into something that would make more money? eg will you need it to purchase housing in the US, would you consider the share market, what other opportunities could you use the money for?
    - what type of loan do you have on it? Is it one where it needs to be reassessed whilst your away and may run into difficulties as you are relying on foreign income.
     
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  9. MTR

    MTR Well-Known Member

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    Decisions decisions. Will you be able to source finance in US .... If you can, its an absolute no brainer, sell up.

    A couple of important factors to consider, has the market peaked in Pakenham, as Melbourne market has softened, how has this impacted on your property today? Will it be easy to sell today? Auction clearances are way down.

    There are actually no guarantees your Melb property will be worth $500K in 5 years, what if is only worth $400K?? or less who knows, we now in a credit squeeze environment, property is going south.

    Another consideration currency play, this is massive. AUD/USD.

    But you will be paid in USD.... .very nice

    The world is your oyster. Once you are in US you will see many opportunities to invest, there are 50 States and many are booming and many States have much lower entry point than in OZ.

    I would not be rushing in but it would be a great idea to be cashed up ready to go.

    MTR:)
     
    Last edited: 13th Jan, 2019
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  10. MTR

    MTR Well-Known Member

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    Clearly, lets just look at what is happening today.
     
  11. SOULFLY3

    SOULFLY3 Well-Known Member

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    The gf’s mum finally sold her Pakenham property after being online for past 3 months
    Didnt get what she wanted either.
     
  12. MTR

    MTR Well-Known Member

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    Sign of the times unfortunately, its now a buyers market
     
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  13. astonma

    astonma Well-Known Member

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    Some great advice been given here, given it’s your home and not an investment property I think the primary factors to be considered are to do with your personal situation rather than trying to crystal ball gaze and predict whether stocks or the prop market will do better in the future. The exit and entry costs are there if you sell and then buy back in later, if there is a chance you will come back to aus at some stage, even if it is remote, I would be renting it out for a year or two and then reassess how you feel about continuing to own it
     
  14. Luca

    Luca Well-Known Member

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    Too many factors affecting the decision. The good thing is that you are moving to US, 10 years is a long time. Make sure you take into consideration opportunity cost and risks. If you are an active investor and not sure if you are coming back (at least for 10 years) I would say sell it and make that money work for you in US. You`ll smash it. If you are set and forget style...same ahahah Who knows what will happen in 10 years time however you know where you can better invest your money today, leaving aside the hassle of having a property in Australia while living overseas. Still need to crunch the numbers. Selling costs, rental yield, taxation, and so on.
     
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  15. Dean Collins

    Dean Collins Well-Known Member

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    You don't mention if its an IP or PPOR - as you may or may not know there is legislation pending (it still may or may not happen) that says even if you sell 1 day after leaving the country your PPOR you no longer get the 6 year rule.


    You don't mention if you understand that expats no longer get the 50% discount for LTCG. Im not sure where you got the figure of 32.5% from as its probably closer to 40-45%

    You don't mention if you "need" the $110k equity, if you don't....then can I suggest sell then use the spare equity cash to do a one time super payment that you don't touch for the next 20-40 years where it can accumulate while overseas for the next decade.

    As someone who lives in the USA (NY) and has investment properties and got caught up in the LTCG discount being removed.....my advice is sell.

    Its a pain in the ass to have to rebuy once you come back to Australia and pay stamp duty etc again but the ATO is making it disadvantageous for expats to own property (we haven't sold ours yet but only because we got screwed and doesn't affect us until we sell etc).

    Im also curious if you are actually going to have to pay any tax today because once you add up stamp duty/buying costs/closing costs/mortgage costs etc....would be surprised if you actually book any profit at all.

    Lastly im assuming you are coming over on an E3 (or L1) if so great.....if not and you are ever thinking of applying for a greencard DONT UNDER ANY CIRCUMSTANCES (google Heart Taxation Act for the reasons why Australians should never apply for a greencard).
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The view that "expats" dont get a CGT discount isnt correct. The word expat has no meaning for tax laws and can be misleading. And the ATO dont make tax laws. The Government does. The ATO just collect the taxes applicable to tax laws. Sorta like blaming the IRS for US tax law changes made by Trump.

    A former tax resident who ceases tax residency THEN sells may well enjoy most or all of the capital gain with a CGT discount if there is a taxable gain. The main residence exemption may apply if it was the former home. BUT once you depart sure future gains cant be subject to discounted gains. Deferring sale may expose a rising CGT cost with time even if the property value does not change. The proposed laws which may or may not impact the property wont apply if the sale is made before 30 June 2019 since the proposed law exempts the impact on such sales. If the proposed law doesnt get up before the election I see no reason why the ALP wouldnt introduce new similar laws with a different start date ?

    CGT withholding may impact a sale IF the taxpayer is not a tax resident at the time of the sale. As a tax resident a clearance certificate may mean witholding is $0. Once non-resident witholding exemption isnt available.

    Decisions to retain the property will need to consider these other taxing issues as well as revisiting if a FIRB rule may hinder you retaining a property acquired with conditional residency approval that ends with your tax residency (legal advice). Also tax advice on the retrospective loss of the former main residence concession or past CGT discounts if the laws are passed (if sold after 1st July 2019) as well as land tax and land tax surcharge or absentee taxation depending upon where the property is located.

    I would seek personal tax advice to ensure any estimated taxable gain is factually determined so choices can be confirmed. For all the hassles it may be easier to sell and sever ties with Australia. However do consider if you ever seek to return that rebuying a property may be prohibited as an acquisition later or subject to duty (with a high surcharge ?). Then consider the annual need to comply with Australian tax and perhaps accumulation of tax losses and other factors that could be avoided by selling.

    And advice on if a entitlement to withdraw Australian super can be made and its cost. A DASP can trigger withdrawal tax but is another option to access the super to assist financing the foreign move. Departing Australia Superannuation payment
    A temp resident for these laws is not affected by a PR visa entitlement etc. Dont confuse the tax term and migration meaning.
     
    Last edited: 18th Jan, 2019
  17. peterwest

    peterwest New Member

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    you should sell it. with all the holding costs, better to sell now.
     
  18. stockboy

    stockboy Active Member

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    Wanted to revisit this as my visa is currently in the application phase and I'm likely to get approved later this year.

    Starting to think about whether I should sell given the CGT exemption has been scrapped for expats.

    The dilemma: I don't know if / when I'll be returning to Australia.

    Property is cashflow positive, would be able to rent it out and cover expenses.

    Pros of keeping the house: Cashflow positive, good appreciation in the Pakenham area, above-average house for the area, good plan B if we decide to move back from the States and need somewhere to live.

    Cons: If we keep the house, we take a financial hit if we sell while in the States because it will be subject to CGT. Financially, it's not necessarily a good move unless we move back to Australia at some point, take up residency, then sell.

    Just a bit confused about what to do. Keeping the house is a good plan B if we decide to move back, and it might end up being financially advantageous, but hard to say.

    My gut says keep it.
     
  19. Trainee

    Trainee Well-Known Member

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    If you sell its only a problem if the price rises beyond your ability to buy it back in the future if you do come back?
     
  20. stockboy

    stockboy Active Member

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    Right. Which, given the strength of Melbourne property, is a likely outcome.