Property investment options for ex-pats

In recent times, Australian real estate has become a very attractive investment prospect for both foreigners and ex-pats; with the nation’s projected housing shortage, there is a high likelihood that ongoing housing demand will support increasing rental yields and capital growth. Despite this, some Australian ex-pats may be deterred from investing in property back home due to the complex taxation and regulatory frameworks that apply to such. To provide clarity around some of these issues, I’ve decided to share the following article by EBM Insurance Brokers, which appeared in the October edition of CENTURY 21 Wentworth’s Property Investor.

 

Tax and the expat property investor

 

An estimated million Australian citizens live overseas - among them many successful property investors.

However, anyone considering a move needs to be aware of the different tax rules which apply.

 

As a non-resident of Australia for tax purposes, any rental income will face steeper tax - with no tax-free threshold and rates starting at 32.5 per cent for the first dollar.

 

General Manager, RentCover, Sharon Fox-Slater, said that expenses including landlord's insurance, interest and property management fees can still be deducted with tax only payable on the remaining income.

 

"The importance of having specialist landlord insurance like RentCover and a strong property management team is even greater if you're living overseas," she said.

 

"That's because you simply can't attend to incidents or inspections in person, and often aren't even in the same time zone. It's tax deductible peace of mind," Sharon said.

 

People who plan to live overseas for an extended period should wind up self-managed superannuation funds to avoid the risk of the funds being judged "non-compliant" and heavily taxed.

 

If an investment property makes a loss, it can be carried forward to offset against any future Australian income.

 

Special rules apply when an Australian moves overseas and rents out their former "principal place of residence" (PPOR).

 

As long as you move back into the PPOR within six years, you maintain your exemption from capital gains tax when the property is sold - however there is no such concession for land tax, which needs to be paid.

 

If you are already living overseas when you buy a home which you plan to move into later on, then capital gains tax will apply to the period the home was rented out for.

 

Sharon from RentCover said many expats had the chance to earn good money - providing a great opportunity to invest back home in Australia.

 

"Even if you're living overseas, it is possible to secure finance on Australian properties and some mortgage brokers specialise in the area," she said.

 

"The rules are complex so you do need to consult your tax professionals and financial planner - and make sure you're covered with landlord's insurance to ensure the process is both profitable and worry-free," she said.

 

While shopping for property from overseas is more complex than it is for those living locally, using the internet, potentially in conjunction with a reputable buyer's agent, makes it a live investment prospect.

 

For more information about RentCover landlord insurance, please visit http://www.rentcover.com.au/.

Posted by Charles Tarbey on 26/10/2012 at 12:00 AM | Categories:

1 Comments

gherlashdawn

gherlashdawn wrote on 01/11/2012 12:36 AM

Well, reading this post helps me actually, very informative, I enjoyed reading this post!

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