I know that no one loves dealing with tax. I would be the number one candidate, with so little knowledge on the issue.I have a couple of investment properties in the USA. A few property managers I used in the past seemed to ‘forget’ about tax too, or at least I was never made aware of any tax contributions made from the rental income.My property manager in Orlando sent me a W9 form to fill out and said they would hold my funds in my owner account until I sorted it out. That was some 18 months ago and I still haven’t done it and there is now over $7000 in my account with them. So I guess its time to get around to fixing it up. I’m just wondering how much tax I am looking at paying, if I can make deductions for repairs and work done and if there’s anything else I may be overlooking?Thanks in advance for your advice. Please no degrading comments regarding my negligence
International tax can be a very complicated area – I would definitely see your accountant. I highly doubt the rental manager will take care of your tax obligations for you as that is your responsibility but I’m sure they would be happy to recommend an accountant in the US.
Residents of Australia are taxed on their worldwide income – so you will be up for tax in both the USA and Australia.
You will need to have an accountant in the US prepare your tax returns over there (I believe some areas in the US require you to lodge both a state and federal return – but I could be wrong). If you are late lodging I assume you could probably be up for interest and penalties on any outstanding liability.
Regarding the deductions you could claim in the US – I do not know but I’m guessing similar principles would apply.
In terms of Australia – I assume you are an Australian resident:
1. You must declare any foreign rental income in your Australian tax return (even you have have left the money in the US and not repatriated it).
2. You will receive a tax offset in your Australian tax return for any tax paid in the US.
3. Your deductions will be limited to the amount of any foreign income (ie – I don’t believe you can negatively gear foreign investments ?)You haven’t provided enough information to estimate your tax but I will give you an example assuming your taxable income in both the US and Australia is the $7,000 you mentioned.
US tax = $7,000 * x%
Australian tax = $7,000 * (your marginal tax rate – x% above)mike h wrote:3. Your deductions will be limited to the amount of any foreign income (ie – I don’t believe you can negatively gear foreign investments ?)Thats abummer if its true .it .makes investing in US less attractive
..but isuppose the less investing amounts needed over there for aussies sorta make up for itThank god there is no double taxation “You will receive a tax offset in your Australian tax return for any tax paid in the US”
So, as don't have an accountant, can anyone recommend a good one in the US?
Jerome I would say that in both cases it depends on how you structure your affairs.
For example, the US does not have a franking credit system. If you run through certain types of US entities you would be taxed at the corporate level, but then again at the individual level.
Sorry that is incorrect you can negative gear your US property income and can also claim Depreciation on the property in your Australian Tax Return.
You dont need a a US Accountant if you can find a Australian based Accountant who is licensed by the IRS.
If you email me i can give you details or our US Company Accountant we use for all of our Australian clients buying in the US.
Based in Melbourne and fully licensed to lodge US Tax Returns.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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