All Topics / Help Needed! / Investing in the U.S.

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  • Profile photo of easymoneyeasymoney
    Member
    @easymoney
    Join Date: 2005
    Post Count: 53
    February 22, 2005 - 3:25 pm

    Hi guys,

    I am hoping someone can help me with a few more questions I have.

    I have $60k in equity as a deposit for an American property, as I hear American banks don’t like to lend foreigners money. Will I lose the 7% or whatever it is to convert the money to American.

    Will I have to pay tax in America on the rent I earn or will I pay the tax in Australia, I imagine America.
    If America can I claim the interest on the $60k I borrowed in Australia as a tax deduction. And will I have to pay more money to then have the money converted back to $Aus.

    I imagine I will then also need an American bank accout which means more account keeping fees.

    The more I think about it the more expenses I think of which makes the 20-25% CoCr look less impressive.

    Can anyone else give me more or think of more expenses I haven’t mentioned that I may need to take into account.

    Thanks guys

    easymoney

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 23, 2005 - 12:50 am

    I don’t really see the point in investing in NZ or usa etc if you are going to buy just one or two properties. The accounting fees, bank fees etc are going to eat away most of the profit. And then there are the hassles of not living there, added telephone bills, travel expenses etc.

    If investing overseas and you are a resident here, you will have to pay tax on your overseas investments here. ATO assesses you on your worldwide income. You will probably have to pay tax there too, if you do, and there is a tax agreement with Aust, then you will not have to pay double tax, and will get a credit for tax paid there.

    You can’t use equity in property here to invest overseas, but must set up some sort of redraw or LOC, and then take the cash out and send over there. If you are getting postive cashflow over there, it would be better to just let it accumulate for a while as there would be fees to send it back here and to convert it.

    Terryw
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    North Sydney
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of easymoneyeasymoney
    Member
    @easymoney
    Join Date: 2005
    Post Count: 53
    February 23, 2005 - 1:50 pm

    Hi Terryw,

    Thanks for the hints, I’ve already thought about what you said about buying more than a couple of properties and don’t worry I plan to.

    Sounds like I will let my money accumulate in an American bank and instead of paying to convert it I could even use it as another deposit with the returns i’ll be making.

    Thanks for your input

    easymoney

    Profile photo of Don NicolussiDon Nicolussi
    Participant
    @don
    Join Date: 2005
    Post Count: 1,086
    February 24, 2005 - 12:25 am

    Hi Terry,
    .
    Goog point about the per unit costs of small portfolios and the associated economies of scale.
    .
    Re double tax. Finding the right structure is probably the most imortant issue. If you can find true cash positive investments and leave the surplus in the structure some of this problem will be overcome. Eg a trust would pay a certain rate on undistributed income, however, that would not cause a personal income tax liabilty to you in Aus until you distribute income.
    .

    .

    Don Nicolussi | Property Fan
    Email Me | Phone Me

    Learning, having fun and doing it!

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