All Topics / Hotch Potch / structuring borrowings for new zealand IP

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  • Profile photo of raymondoraymondo
    Member
    @raymondo
    Join Date: 2003
    Post Count: 6
    December 15, 2003 - 2:25 am

    Hi Everyone,

    I was wondering if anyone could help me with advice about my options to finance the purchase a $190k IP in New Zealand. It’s cashflow positive.

    I have enough equity in our PPOR here in Australia to purchase it outright. If I do that will I be able to claim the interest costs on the loan when I complete my NZ tax return? (since the borrowings will be in Aust) This approach would leave me with an unemcumbered IP in NZ.

    The alternative would be to use the equity in one of my Australian IP’s to raise the 20% deposit and mortgage the NZ IP via a lending body over there for the 80%.

    Is there any difference or benefit in either approach? Does anyone have a better solution than those I can see?

    Thanks

    Raymondo

    Profile photo of RodCRodC
    Member
    @rodc
    Join Date: 2002
    Post Count: 335
    December 15, 2003 - 10:57 pm

    hi Raymondo,

    I haven’t done this some I’m only guessing. I’m also assuming the NZ IP is owned in your own name as company/trust ownership would complicate the answer.

    I would think that as the property is +ve you would pay tax on the income in NZ. You would then declare this income in Australia and receive a tax credit for the tax already paid in NZ. (So you’re not really being taxed twice). The interest cost of the funds (I’ve assumed 100% Australian borrowings) would be claimed in Australia.

    I think you need to talk to a good accountant.

    regards,

    Rod.

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