Oz Citizen - Working in US - Planning to buy IP in Melbourn

Discussion in 'Accounting & Tax' started by REinvestmentlearner, 19th Jan, 2019.

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  1. REinvestmentlearner

    REinvestmentlearner Member

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    Hi,

    Long story short. I am an Oz Citizen and working in US (for tax purpose i become non-resident in Oz).

    I am looking to buy first IP in Melbourne while I am working in US. Is it right thing to do? What are the tax implications of buying a property while overseas and if sell it what are the implications. Do I need to pay tax on all the CGs.
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I'm not a tax guy. But the finance side for expats can be an issue. Least u are earning USD so that's a plus


    Ta

    Rolf
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Consider loss of the 50% CGT discount, no tax free threshold and land tax and stamp duty surcharges - which may not apply if you are a citizen but seek legal advice in case.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    In some states the stamp duty could be double. You'll need to check this with a conveyancer in whatever state you intend to purchase.

    I'll reiterate Rolf's comments on lending, it's not to be understated. The USD may be the gold standard for currencies, but lenders assess all foreign income incredibly conservatively. It can be as if you're earning about 40% of the actual figure.

    Don't assume you'll qualify for a loan. Don't even assume that a pre-approval will be honoured.
     
  5. Paul@PAS

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

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    I would start with tax advice that confirms your tax residency. Many people make assumptions which may be flawed. This will materially alter whether positive or neg gearing is at all beneficial or a non-event. And how any capital gain may be subject to future tax (ie NIL CGT discount). You say "first IP"so the issue of any existing property (ie home) may also have a tax impact.

    Then I would be speaking to a broker to understand how your finance needs are to be addressed. Many lenders have limited or NO lending to non-residents and if they do they may seriously devalue the income earning in the USA for servicing and ignore AU property neg gearing. On the plus while absent you may rack up a accumulated tax loss of future benefit (maybe)

    Then if you are a citizen you should be free of MOST BUT NOT ALL state tax concerns. I would seek specific legal advice in the state you are considering the property to ensure its OK. For example in QLD the absentee land tax rules would become a concern where in NSW / Vic the issue of being non-resident may not be a concern as you meet the citizenship test. These rules can affect stamp duty as well.
     
  6. Jordan Sinclair

    Jordan Sinclair Well-Known Member

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    Have you considered US property? You can buy a property outright for the price of a deposit in Australia. Decent cash flow and many more options are available in the US.