Hello there
First time on this site, seems a wealth of knowledge to be had and looking forward to reading thru it all, well as much as I can. My wife & I are looking into our first IP, have a little left on our own home and will be sourcing an accountant in due course. I have read the disclaimer above but just looking for a heads up on a couple of questions.
Here is our situation.
I live in Oz but work overseas. Tax is paid on my behalf by my company. The countries I work in come under the 40 tax aggreement countries treaties. At present I have been focusing on paying off our home loan for the last few years via an offset account. I have no other income as such and my wife does not work. Consequently I have not had to pay any tax in Oz since working o/s.
If I was to purchase a property and positive gear it, am I correct in believing that tax would only be need to be paid on the rent I get & that it would be at the top marginal rate, as my foreign income would dictate that. Also that the foreign income would not be taxed here as it has already been o/s?
Could I negative gear it and just work the rent recieved against the interest while still putting my own cash into the loan?
Could I pay the loan and have the rent go into a new seperate account for my wife only to do as she pleases so that she would enjoy tax free thresholds and rates as per yearly income recieved?
Or is there a better option?
Cheers
PaulAnyone
complex. you would need to see a specialist tax advisor.
So you are not a resident for tax purposes?
I would think you would just have to pay tax on any profit at the rate applicable to non-residents – starting at 30%. You can do anything you like with the income, eg put it in your wife's account. Why not buy in her name? You could guarantee the loan if she has no income. It would probably cost you a fortune in accounting fees it you did it in your name as teh average accountant wouldn't know where to start.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry
Thanks for the reply.
I am and have always been a resident for tax purposes. Last financial year I worked fully o/s and did not have to pay tax back here, still had to lodge a tax claim though.
Will be looking around regardless for a good tax guy/ accountant, just thought I would get some info here first.
Cheers
PaulPTW wrote:Obviously the only advice/opinion worth taking is from a qualified accountant who is familiar with this area…. which I definitely am not.
However
If I was to purchase a property and positive gear it, am I correct in believing that tax would only be need to be paid on the rent I get & that it would be at the top marginal rate, as my foreign income would dictate that. Also that the foreign income would not be taxed here as it has already been o/s?I believe that's exactly how it works.
Could I negative gear it and just work the rent recieved against the interest while still putting my own cash into the loan?
I assume you mean you want the property to be neutral. If you just use an offset account tied to the IP loan this should work fine.
Could I pay the loan and have the rent go into a new seperate account for my wife only to do as she pleases so that she would enjoy tax free thresholds and rates as per yearly income recieved?The property would have to be in your wifes name only. Again, use an offset account to deposit your wages to reduce interest expense for the IP ( but first finish "paying off" your home loan )
Or is there a better option?I would look into the pros and cons of a discretionary trust.
Hope this helps
ElkaMany thanks for the reply Elka.
Just spoke with a bloke who arrived onboard today and he mentioned most of what you had above there. I will be following this up with someone who has expertise in this field. Just have to fins someone in the Brisbane/GC area now.
Cheers
PaulPaul, we’re overseas investors and don’t live in Australia (yet) but do hold a reasonable portfolio of properties across QLD. First properties were bought in our own names but latter ones through discretionary trusts – there are a number of benefits to this but it depends on your situation and what your plans are if this would be worth your while. If you PM me I can give you contact details of our accountants who are pretty good.
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