Forum Replies Created
Chiz
Suggest reading this guide on the treasury site for more info on fifs/cfc's if you need it.http://www.treasury.gov.au/documents/881/PDF/RITA_Glossary.pdf
The goal of the FIF/CFC regime is to assess Aust resient taxpayers accumulating significant offshore passive income which could otherwise be deferred. Under FIF, you would be taxable on the increase in the value of the assets which means you could be paying Australian tax on unrealised foreign capital gains, but the FIF rules arent relevant for foreign real estate investments or foreign bank accounts. It would not be practical to obtain a valuation each 30 June to meet oz tax requirements!
As an Aussie investing o/s, any net income or loss on your o/s rental property operations will flow through to your Aust tax return, where you'll be assessed at marginal rates (just like with an Aust rental property). Losses on foreign income USED to need to be quarantined into different classes (interest, modified passive, other etc) but this is no longer required from July 09 onwards. Just telling you in case you have been exposed to outdated info, or have leftover losses from prior yrs.
You need to convert the foreign income into AUD. The rate to convert depends on what you do with it. If you keep the money in NZ (and let it biuld up in a property mgrs trust acc or your own NZ bank account), the exchange rate is as at year end. If you bring it back, the rate is at the time of bringing the funds in. Cap gains on foreign assets are assessable the same way that oz ones are, and cap losses are quaranted.
You may also get taxed on the income by the NZ authorities. To avoid double taxation though, any o/s tax paid can be used as a credit against oz income.
Hope this helps.
Josh
Archnic
I read your post with interest and thought id have a go at some of your queries. I have recently purchased some units in Jamestown, NY and am an acct in oz.
1. I believe you would be required to complete a US tax return regardless of whether you are holding the property through an LLC, C Corp or your own name. Of course, you SHOULD be able to claim any tax back on your return in oz via foreign tax credits. Dont know which form though sorry. I havent held my property for the whole tax year yet.
2. You can claim any deductions reasonably incurred in earning your assessable income. Anything incurred in relation to your property in the US is deductible, as long as its not a capital improvement (which gets added to your cost base). Even travel expenses if the sole purpose is to check on the properties. Plenty of info on the ato site re this. You can negatively gear the investment on your oz tax return. I am not sure if neg gearing is allowed in the US though? Something i need to research.
3. You should perhaps look at getting a US acct the first time you do your US taxes. Just to ensure that everything gets setup correctly. I cant help with Syracuse, but Al Suchar in Jamestown NY came highly recommended to me. I havent used his services yet.
PM if youd like to chat. It would be good to exchange some info with another oz investor exploring the ny market.
Cheers
JoshHi Nigel
Agree that the Atlanta vacancy rates on the sites, (such as bestplaces, yahoo real estate, redcapital etc) look high in comparison to other large metro areas but i havent seen 16% quoted. Closer to the 10-12% mark. Where did you see that out of interest?
Also agree on the independent research. Suggest to anyone purchasing buy and holds or properties to flip in the US that you do research on the US real estate forums (i use http://www.biggerpockets.com – its the best ive seen), and look on US private sales sites (such as craigslist). Craigslist is where i found my place in New York state.
Cheers
JoshTry Mike and Bron from Top Rental Returns. They are aussie brokers that have setup in Atlanta. They are flipping houses to Aussie investors by assisting with the closing process, sourcing property mgrs, attorneys, contractors etc. They are just starting out in the US, but experienced in property in oz.
