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The impact of dollar on property

Discussion in 'General Property Chat' started by hash_investor, 10th Jun, 2016.

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  1. hash_investor

    hash_investor Well-Known Member

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  2. big max

    big max Well-Known Member

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    Yes correct. There is an inverse correlation. Low AUD is positive for Ozzie property. And especially so for tourist economies such as the Gold Coast.

    Yes buying US might produce a similar result but most people can't get the same type of leverage to buy usd vs property.
     
  3. MTR

    MTR Well-Known Member Premium Member

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    have already started transferring Aussie$ to US bank account
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    it can also work the other way, why would foreigners buy Australian property if they see the economy is tanking? The concerns may be that property prices will fall
     
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  5. hash_investor

    hash_investor Well-Known Member

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    correct. I am in a fix... blocking all capital in property may cost an opportunity of a lifetime
     
  6. MTR

    MTR Well-Known Member Premium Member

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    I guess it's a matter of working out what is he best way for you to make money moving forward.

    I am a believer of taking some money off the table/profits and have a bet each way. Markets work in cycles, no point having everything locked up in a down cycle, when you could have money it working for you, making more money, just my opinion
     
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  7. MsAli

    MsAli Well-Known Member Premium Member

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    Economies within economies.

    Good to examine what's out there e.g. vacancy rates, available land, interest rates, demographics etc.

    However at the end of the day, the key is to to take action and seize opportunity.
     
  8. hash_investor

    hash_investor Well-Known Member

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    Great tax free capital growth
     
  9. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Forex gains or losses from 1 July 2003 are covered by Division 775 of the Income Tax Assessment Act 1997(ITAA 1997).

    The general principle is that foreign currency gains or losses have a revenue character rather than a capital nature. Foreign currency gains or losses are assessable or deductible when they are realised if they occur as result of a forex realisation event (FRE). They are realised when an FRE happens.

    There are five forex realisation events listed between sections 775-40 and 775-60 of the ITAA 1997. A forex realisation events take place when certain rights and obligations cease or are disposed of in whole or in part. FRE2 will occur when you make withdrawals from your foreign currency denominated account. Under subsection 775-45(1) of the Income Tax Assessment Act 1997 (ITAA1997) each withdrawal that you make constitutes a part ending or part satisfaction of your right to receive foreign currency. This right was acquired in return for you paying an amount of foreign currency, therefore FRE2 will occur on each occasion that you convert FC to AUD.
     
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  10. big max

    big max Well-Known Member

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  11. Beano

    Beano Well-Known Member

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    Why not buy US pegged properties overseas instead of investing in $$$?
     
  12. Starbright

    Starbright Active Member

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    @MikeLivingTheDream what if you earn offshore currency and convert to $A while you are still a non resident? I'm guessing that would not be taxed in Australia.

    What if you earn offshore currency and convert say, 1 or 2 years after you have returned to Australia? Is there a difference in tax treatment? Thanks
     
  13. MTR

    MTR Well-Known Member Premium Member

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    that is exactly what we are doing, but todays market is a different beast to what it was in 2011 where there was an abundance of foreclosures, the competition today is much more fierce and there is not enough stock to go around.

    If you want the higher yields you need to understand your market and you need to use different strategies


    MTR:)
     
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  14. big max

    big max Well-Known Member

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    You could. But on a constant currency basis US property probably will not rise as much as an oz property in a declining AUD environment. These things tend to even themselves out over time ...
     
  15. big max

    big max Well-Known Member

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    Yes this is they way to go in a falling AUD environment. Earn in a low tax place like HK or Singapore. It won't be taxed if you are a non resident. You also won't be taxed on any subsequent currency conversion.
     
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  16. Beano

    Beano Well-Known Member

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    Its
    Yes interest is not taxed (at source) or in Australia (if non resident or temporary tax resident like most New Zealanders in Australia are ) in HK, property (net yield approx 3%)15% in HK and the currency is pegged to the $USD
     
  17. Beano

    Beano Well-Known Member

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    But this does not apply if the account is held offshore and the tax payer is non resident or a temporary tax resident (like most New Zealander and some other are )
     
  18. MTR

    MTR Well-Known Member Premium Member

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    you will pay tax in US and if bringing money home it will be credited back
     
  19. Beano

    Beano Well-Known Member

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    I don't know about the US but I was referring to HK investments by New Zealanders (most would be australian temporary tax residents )