Owning property in Australia

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Forums › Finance and wealth management › Owning property in Australia

sir1963

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#284049 27-Mar-2021 21:38

So, Grant Robertsons current move has made me believe that having all of our eggs in one basket (NZ) is a risk.

So I am looking at a Plan-B

I am wondering about buying an Apartment in Surfers Paradise, something we can rent out Air BnB style while also allowing us to use it as a Holiday destination ourselves.

Anyone done this ?

Yes, I will be talking to my accountant and lawyer, but any information would be helpful.

Handle9

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#2681824 28-Mar-2021 04:46

You need to get an accountant on both sides of the ditch. Tax residency is fairly tricky and Australia has a lot of rules that just aren't applicable in NZ. There are many many types of deductions in Australia that you'd never think about. Everyone I know in Australia employs an accountant.

As a property owner in Australia it'll probably work out quite well for you but it's not as simple as NZ.

lNomNoml

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#2681885 28-Mar-2021 10:37

Make sure your people know Australian law to avoid any problems.

xpd

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#2682020 28-Mar-2021 15:01

And if you go to sell it, ensure all your ID's etc (passport etc) are up to date or else it can be a long process to finally get everything signed off.

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mattwnz

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#2682034 28-Mar-2021 15:57

I would think it would be very difficult to run it as an airbnb when you aren't there looking after it. You could employ someone to manage it, but that is taking away a lot of the benefits. I am not sure what the benefit is buying in Oz, vs NZ. Both have high property prices, although the bubble in Oz in places doesn't appear as bad as NZs. Possibly due to them have more taxes around property. I would be interested to hear what your account has to say about it.

dt

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#2682049 28-Mar-2021 17:01

Aussie has a foreign ownership tax stamp as well, so you'll need to take that into consideration.

Handle9

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#2682050 28-Mar-2021 17:08

mattwnz:

I would think it would be very difficult to run it as an airbnb when you aren't there looking after it. You could employ someone to manage it, but that is taking away a lot of the benefits. I am not sure what the benefit is buying in Oz, vs NZ. Both have high property prices, although the bubble in Oz in places doesn't appear as bad as NZs. Possibly due to them have more taxes around property. I would be interested to hear what your account has to say about it.

Why would it be difficult? You get a management company to take care of it. Many of the blocks have in house management as well and basically run as apartment hotels.

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chevrolux

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#2682051 28-Mar-2021 17:29

So, Grant Robertsons current move has made me believe that having all of our eggs in one basket (NZ) is a risk.

Yea massive risk, god forbid you actually pay of tax on income in your own country!

sir1963

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#2682058 28-Mar-2021 18:04

chevrolux:

So, Grant Robertsons current move has made me believe that having all of our eggs in one basket (NZ) is a risk.

Yea massive risk, god forbid you actually pay of tax on income in your own country!

I have been paying tax on the basis that it was a business and that legitimate business expenses could be deducted, just like every other business

Robertson has changed all of that, against it seems advice from IRD and Treasury.

Hence the desire for Plan-B, and we get a great family vacation home too

Delphinus

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#2682071 28-Mar-2021 19:00

sir1963:

I have been paying tax on the basis that it was a business and that legitimate business expenses could be deducted, just like every other business

Do you also pay tax on your income like every other business (eg the houses capital gains) ?

sir1963

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#2682083 28-Mar-2021 19:47

Delphinus:

sir1963:

I have been paying tax on the basis that it was a business and that legitimate business expenses could be deducted, just like every other business

Do you also pay tax on your income like every other business (eg the houses capital gains) ?

100% YES because we have NO capital gains here in NZ

https://www.business.govt.nz/how-to-grow/planning-to-exit/selling-your-business/

"New Zealand has no capital gains tax, so you won’t be taxed on profits you make selling a business."

Except now we do, for landlords, its called the bright line test, it is being used as a proxy capital gains tax.

The Brightline test was bought in because of property developers were trying to pretend to be landlords and avoid paying their taxes. It was not there to attack landlords although that is what it is now being used for now.

Kyanar

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#2692764 14-Apr-2021 16:03

First things first. Legally, you will only be able to purchase a brand new property or substantially redeveloped one. You cannot buy established property, and you will require Foreign Investment Review Board approval prior to purchase.

Assuming purchasing in Surfer's Paradise and an apartment you'll also pay:

Transfer/stamp duty
Absentee Land Tax
Gold Coast City Council rates based on whatever arbitrary category you fall into
Strata Levies (probably a good $3000 a quarter at minimum)

You will pay Capital Gains Tax on the property when selling it - the ATO is very unequivocal about this. If you're planning to rent out with AirBNB or such, you'll need to read the Body Corporate Bylaws very carefully - some of them forbid it. Also, where are you getting a mortgage? Very few Australian banks will lend to foreign residents, and if they do you will need to stump up probably a good 50% of the purchase price as a deposit. If it's a New Zealand bank, your mortgage interest won't be deductible anyway since that mortgage will be under New Zealand tax jurisdiction not Australian.

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mattwnz

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#2692874 14-Apr-2021 19:04

Wish we had some of those taxes on property in NZ. Took us far too long to bring in some of the ones we do now have.

cshwone

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#2692881 14-Apr-2021 19:44

mattwnz:
Wish we had some of those taxes on property in NZ. Took us far too long to bring in some of the ones we do now have.

Why? Australia has a similar if not quite as an extensive property inflation issue as we do. My daughter has a pretty average colonial villa in NW Sydney. She couldn't afford to buy it now.

So what effect do the taxes have other than enriching the government. If anything prices will rise to partly compensate for those taxes