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Help pls - Overseas property investor in OZ

Discussion in 'Real Estate' started by Cherry Pro, 2nd Aug, 2007.

  1. Cherry Pro

    Cherry Pro Active Member

    Joined:
    18th Jul, 2007
    Posts:
    44
    Location:
    Sydney, NSW
    Hi - have a query which I hope some of you can help with.

    My brother who lives in the US is looking to invest in residential property in
    Australia (given the state of the US market, thinks Australia is a better bet) He currently is an OZ perm resident and has to return to live here in 4 years to maintain his residency. Not sure at this stage whether they will move back to OZ or continue to live in the US.

    At present, know he can buy property in Australia. Once his perm OZ residency has lapsed, can he continue to hold property here ? What about
    selling ? Will he have to file a tax return here over the period that he holds
    property ? Will he be liable for CGT when he sells .. say in 10 - 15 years time ?
    How easy will it be for him to transfer funds (say the property will be positive
    cash flow in 3 - 4 years) out of Australia ?

    Any insights would be appreciated.

    Many thanks.
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Residency for Taxation Law purposes is quite different from immigration law.

    If the stay overseas is temporary and he intends to return then he might be regarded as an Australian resident for tax purposes depending on his living arrangements while overseas.

    This means world-wide income is assessable here with a credit for tax paid overseas - including any income derived in the US. He might also be regarded as a resident for tax purposes in the US as well !

    HOWEVER a double tax agreement with the US overrides domestic law and arranges tax sharing between nations.

    Australian real property will always be subject to CGT here when sold, BUT other assets might be subject to CGT at the time residency CHANGES - i.e. even if not sold - unless you make an election. Rental income will be assessed here subject to any double tax agreement.

    This is a very complex area and many of the larger Taxation Law firms have specialists in planning for ex-pats. A bit of timely advice could save you a lot of heartache !!!

    Cheers,

    Rob
     
  3. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
  4. Cherry Pro

    Cherry Pro Active Member

    Joined:
    18th Jul, 2007
    Posts:
    44
    Location:
    Sydney, NSW
    Thanks Rob and Jacque - appreciate your advice. It's time to get this
    sorted out with an accountant.

    Cheers.