Tax in mortgage repayments?

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Benny Dubria
Mortgage Specialist
Posts: 26
Joined: Mon Apr 29, 2013 3:00 pm
Location: Sydney, Australia
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Re: Tax in mortgage repayments?

Post by Benny Dubria »

Hi Missy,

Thank you for your email.

Generally in Australia tax is implicated with your income threshold. So tax would apply when receiving rental income. Generally you do not pay tax on paying back mortgage repayments. The interest on the loan would offset the rent income (this is known as negative gearing) so in many cases you would not need to pay income tax in Australia.

However, for more clarity I would suggest you have a look at the Australian Tax Office website or speak to an Australian Accountant. I believe there is a tax for NZ citizens who are living in NZ who own a property in Australia. It is a withholding tax on the interest paid if the bank that you borrowed with does not have a branch in NZ.

Overall most of our NZ customers do not mind as it is a relatively small amount compared to the gains that they get on their property. At last check it was 10% of the interest paid so if your loan was a 6% then your effective interest rate would be 6.6%. For queries about this withholding tax please speak to an Accountant in NZ as we are not experts in NZ taxation.

In many cases we are able to get a customer's loan approved with an Australian bank that has NZ branches which means this tax does not apply anyway.

Regards,
Benny Dubria
Senior Mortgage Broker
P | 1300 889 743 E | benny@homeloanexperts.com.au
Home Loan Experts

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