Can I get tax benefits with Australian properties?

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kenryu
Posts: 53
Joined: Wed Jul 03, 2013 8:27 pm

Can I get tax benefits with Australian properties?

Post by kenryu »

Good morning!

I'm based in Hong Kong but I have a brother in Perth who has been telling me to invest in property in Australia. I don't have any experience in this but I do have some money that I would like to invest so I'm quite interested about this.

I have heard my wife's brother who does property investing here talk about negative gearing and capital gains tax. I understand the basics about these however I was wondering if I can get these benefits if I buy property in Australia?

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Otto Dargan
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Re: Can I get tax benefits with Australian properties?

Post by Otto Dargan »

Hi Kenryu,

The tax side of things can be a little complex.

Firstly I am not an accountant and I am not an expert in Hong Kong's tax system. So the below info is true to the best of my knowledge however you should talk to an Accountant as this is their bread and butter.

Negative gearing is where you can offset the cost of holding your investment property against your other Australian income. In your case I am guessing you will have no income in Australia aside from your rent. So basically the rent would be tax free and you can save up the additional tax deduction to offset against future income in Australia.

As for capital gains tax, when you sell the property you will pay tax on the gain in value. However if you hold the property for more than one year then you get a 50% discount.

Both of these tax laws are complex and have many exceptions and other irregularities. This is the simple explanation!

Ultimately investing in Australia can be very beneficial, irrespective of tax benefits, if you buy the right property and you can qualify for a mortgage.

Cheers,
Otto
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kenryu
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Joined: Wed Jul 03, 2013 8:27 pm

Re: Can I get tax benefits with Australian properties?

Post by kenryu »

Yes I have read how the property prices in Australia are quite stable and that your government regulates all the foreign investment towards the growth of the economy. On that matter I have no argument, but I am still a novice to foreign investment.

Speaking of the government, do you think there is any chance that the recent elections will affect foreign investors or property investing altogether?

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Otto Dargan
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Re: Can I get tax benefits with Australian properties?

Post by Otto Dargan »

The recent elections will not make any difference to foreign investors. They may have made a difference for immigration as this was a hot topic during the election.

However to be honest I didn't pay attention to the immigration changes that both parties were proposing so I am not sure how this will affect people who are buying a property in Australia and intending to move to Australia at a later date.

There are a few economists suggesting that we should get rid of negative gearing benefits for investors however neither party agreed with this, I don't think it will happen as it would increase the cost of renting significantly.

Cheers,
Otto
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kenryu
Posts: 53
Joined: Wed Jul 03, 2013 8:27 pm

Re: Can I get tax benefits with Australian properties?

Post by kenryu »

I spent this weekend thinking about this and I was wondering if I should just send the money to my brother and get him to invest it?

I was reading a post on your home loan forum about that Indian father wanting to send money to his daughter to purchase an apartment and I think it’s not such a bad idea.

What do you think about it?

kenryu
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Re: Can I get tax benefits with Australian properties?

Post by kenryu »

Oh and he’s married to an Australian and is there on a work visa.

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Otto Dargan
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Re: Can I get tax benefits with Australian properties?

Post by Otto Dargan »

Hi kenryu,

Yes I think it would be much easier if he bought the property in his name while residing in Australia.

In fact if he is married to an Australian citizen it will make things a lot easier for him.

All non citizens have restrictions placed upon them by the FIRB as to what they can buy and will have to get approval first. The FIRB is a governmental agency which reviews all purchase applications made by foreigners.

If your brother has an Australian spouse, he will not need FIRB approval nor will he face any restrictions on the property. This is only if his partner is applying to buy the property along with him and they are listed as ‘joint tenants’.

Foreign investors like yourself will have to get FIRB approval, can only buy new property or vacant land to be constructed on.

If your brother needs help, he can always contact us on 1300 889 743 and one of our expert mortgage brokers will contact him immediately.

Cheers,
Otto
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thomas
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Joined: Wed Jun 24, 2009 4:16 pm

Re: Can I get tax benefits with Australian properties?

Post by thomas »

Otto, I would also like to buy a house here.

What are the exact restrictions for someone who is working in Australia but does not have an Australian spouse?

Just to let you know, I have been working in Australia for more than 4 years now for an MNC. They set me up in an apartment in the beginning but I think that I might settle down here for good.

Thanks
Thomas

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Otto Dargan
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Re: Can I get tax benefits with Australian properties?

Post by Otto Dargan »

Hi Thomas,

As a temporary resident, first of all you need approval from the FIRB to purchase a house here. Secondly you can only buy one property and you must live in it – if you leave Australia you will be required to sell it. Lastly you can also buy investment property as long as it is a new establishment or it is a vacant land for construction purposes.

These restrictions are the same for all temporary residents such as those on a spouse visa, 457 work visa or a student visa.

I hope that answers your questions.

Cheers,
Otto
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