Australian - (Property) - Capital Gains Tax Changes for Foreign Residents

[4MyEgo]

For those who own a property back in Australia and are looking to retire overseas, not just Thailand, this could be of interest ?

 

As part of the 2017-18 Federal Budget, the Australian Government announced on May 9, 2017 a range of reforms.

 

One of the Federal Budget announcements was that as of 7:30pm (AEST) on May 9, 2017 foreign and temporary tax residents would no longer be exempt from capital gains tax (CGT) when selling their main residence; this rule was made subject to grandfathering for existing properties held on this date and disposed of on or prior to June 30, 2019.

 

The Government has now released an Exposure Draft of a Bill to implement these measures for consultation. The closing date for submissions on the Exposure Draft is August 15, 2017.

 

The Exposure Draft proposes that the CGT main residence exemption will be denied from 7:30pm (AEST) on May 9, 2017 for foreign residents. In addition, there will be no apportionment of the main residence exemption based on days of ownership over the whole period of ownership. Existing properties held on May 9, 2017 will be grandfathered until June 30, 2019. For the purpose of the Exposure Draft, “foreign resident” means someone who is not a tax resident of Australia.

 

Foreign residents, including Australian citizens and permanent residents who are foreign residents, should consider how these changes will impact their circumstances.

 

I dare say, it look like the "6 year rule" (exemption) on capital gains tax for your main residence, is truly on its way out, if passed through parliament.

[maoro2013]

Well typical

 Australians cannot plan for their retirement easily. The rules keep changing, superannuation  and now this one. The sole and principle residence has always been exempt, up to a certain value as was Capital Gains Tax. If you are a non resident, for tax purposes, it may be tricky as the residence may not be your sole and principle residence. You need a tax adviser on this as whether the residence was you sole or principle residence 'IN AUSTRALIA'. 

 

[MadMuhammad]

And this is another reason for me to sell my property before I leave in 18 months. I've had family and friends, and I've noticed a majority on TV as well, say 'keep your property in case you want to return one day' or 'the rental is a great income.'

One reason I'm selling up before leaving is that the capital gains I will have made on the property by that time will take me 15+ years to realise through rental (not including expenses such as rates, property management, repairs etc) and the money will be of much more use deposited in my share portfolio.

Now that I've seen this I have even more reason to go ahead with the sale.

The Australian government loves overspending then moving the goal posts on the common man to make up the shortfall.

Edited September 19, 2017 by MadMuhammad

[tryasimight]

1 hour ago, MadMuhammad said:

And this is another reason for me to sell my property before I leave in 18 months. I've had family and friends, and I've noticed a majority on TV as well, say 'keep your property in case you want to return one day' or 'the rental is a great income.'

One reason I'm selling up before leaving is that the capital gains I will have made on the property by that time will take me 15+ years to realise through rental (not including expenses such as rates, property management, repairs etc) and the money will be of much more use deposited in my share portfolio.

Now that I've seen this I have even more reason to go ahead with the sale.

The Australian government loves overspending then moving the goal posts on the common man to make up the shortfall.

Totally agree...although you can decide when to become a non resident for tax purposes. I think you can still get the CGT exemption even when overseas provided you remain a resident for tax purposes. Sounds a bit strange but that is what my accountant told me. If you manage your affairs correctly you can be a tax resident but pay no tax anyway.

Be careful with your shares etc as they may hit you for the full 32/33% ( no 0% on the first 15/18k or whatever it is now) straight away on any earnings if you choose to become a non resident for tax purposes.

Unfortunately the 'normal' Aussie citizen has been caught in the net that was intended to stop, for instance, overseas based Chinese investors, buying property for speculation.

[MadMuhammad]

4 hours ago, tryasimight said:

Totally agree...although you can decide when to become a non resident for tax purposes. I think you can still get the CGT exemption even when overseas provided you remain a resident for tax purposes. Sounds a bit strange but that is what my accountant told me. If you manage your affairs correctly you can be a tax resident but pay no tax anyway.

Be careful with your shares etc as they may hit you for the full 32/33% ( no 0% on the first 15/18k or whatever it is now) straight away on any earnings if you choose to become a non resident for tax purposes.

Unfortunately the 'normal' Aussie citizen has been caught in the net that was intended to stop, for instance, overseas based Chinese investors, buying property for speculation.

Oh Jeebus. That's just ridiculous. I will definitely be sitting down with my accountant and discussing this in further detail. 

It seems to be typical with a lot of Aus legislation, implemented in attempt to stop rorting or a certain class of person, but ends up catching poor buggers like me out. Meanwhile the people they intended it for, overseas investors with money, end up finding away around it anyway. 

Thanks for the information, most definitely something I need to be aware of.

[ncc1701d]

Unless I’m reading it wrong, I’m not sure why they call it a “capital gains tax” when the taxable amount is taken from the full sales price - regardless of what it was bought for.

 

https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Calculating-a-capital-gain-or-loss/Capital-gains-withholding--Impacts-on-foreign-and-Australian-residents/

[moojar]

On 20/09/2017 at 1:13 PM, ncc1701d said:

Unless I’m reading it wrong, I’m not sure why they call it a “capital gains tax” when the taxable amount is taken from the full sales price - regardless of what it was bought for.

 

https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Calculating-a-capital-gain-or-loss/Capital-gains-withholding--Impacts-on-foreign-and-Australian-residents/

 

You get to deduct any costs from the sale price.  Costs like the purchase of the property, stamp duty, real estate commission, auctioneers fees etc.. 

 

But under this budget measure you pay tax on the total profit - no discount.  (And because you are non-resident, no tax-free threshold.)   If you sell a $200k property for $500k as a resident, assuming $20k in other deductibles, you pay tax on 50% of the $280k profit - the 'capital gain'.  So you pay tax on $140k.  As a non-resident you'd pay tax on 100% of the profit - pay tax on $280k.

 

BTW, the ALP has a policy of sharply reducing the CGT discount (to 25%), and for abolishing negative gearing.  They are well ahead - 8 points ahead - in the polls, and there's an election due by late 2019. Young people are screaming on social media for neg gearing to be abolished, so it's going to happen.      

       

[ELVIS123456]

9 hours ago, moojar said:

 

You get to deduct any costs from the sale price.  Costs like the purchase of the property, stamp duty, real estate commission, auctioneers fees etc.. 

 

But under this budget measure you pay tax on the total profit - no discount.  (And because you are non-resident, no tax-free threshold.)   If you sell a $200k property for $500k as a resident, assuming $20k in other deductibles, you pay tax on 50% of the $280k profit - the 'capital gain'.  So you pay tax on $140k.  As a non-resident you'd pay tax on 100% of the profit - pay tax on $280k.

 

BTW, the ALP has a policy of sharply reducing the CGT discount (to 25%), and for abolishing negative gearing.  They are well ahead - 8 points ahead - in the polls, and there's an election due by late 2019. Young people are screaming on social media for neg gearing to be abolished, so it's going to happen.      

       

Yes it is going to happen, and a lot more. Both Parties are proposing to reduce the benefits to people owning properties - especially investors and Expats. This all means that owning a property in Aust is not something that most Expat retirees can afford to do - especially if one day they want to sell it. My plan is to only ever rent a property when I get the OAP - whatever happens in the future. 

 

The downsides of owning a property for Expats just keep getting bigger and bigger, and that aint gonna stop anytime soon. Both Parties while in Govt keep finding ways to decrease pension payments to Expats while increasing their taxes - to pay for all the social welfare burden. Australia truly has become a socialist nanny state. 

 

 

 

[MadMuhammad]

All this is just cementing my resolve to sell on exit in 18 months. 

It would take approximately 15 years of rental income not inc property management fees, insurance, maintenance etc before I would start to see a gain on what I'd already receive in capital gain on today's valuation of my property. 

Sure I'd be losing from there on out but investing further in my share portfolio and keeping a cash reserve makes a hell of a lot more sense now in aware of the points in this thread. 

A lot keep mentioning the instability of the military junta rule in Thailand, well its far more predictable that the Aussie governments 'moving of the goal posts' that happens year on year!

Edited September 22, 2017 by MadMuhammad

[ELVIS123456]

4 minutes ago, MadMuhammad said:

All this is just cementing my resolve to sell on exit in 18 months. 

It would take approximately 15 years of rental income not inc property management fees, insurance, maintenance etc before I would start to see a gain on what I'd already receive in capital gain on today's valuation of my property. 

Sure I'd be losing from there on out but investing further in my share portfolio and keeping a cash reserve makes a hell of a lot more sense now I'm aware of the points I'm this thread. 

A lot keep mentioning the instability of the military junta rule in Thailand, well its far more predictable that the Aussie governments 'moving if the goal posts' that happens year on year!

And dont forget about the 'Bad Tenant' you could get and the Nanny State laws that shield and protect the innocent oppressed tenants against the oppressive rich owners. Whilst having one aint so bad when you are negative gearing a property, if you are relying on the rental income then you will be up the proverbial creek if you get a bad tenant - especially bad when you are in Thailand.  

 

And wait there is more - in the ACT you have to pay 2-3 months PA rent as a tax, on top of the increased rate tax, whether the property is rented at the time or not. You reckon the other States are gonna also start slogging rental properties more in the future - you bet your xxx they will. 

 

 

 

 

[MadMuhammad]

The bad tenant is one of my biggest fears. My townhouse has a high end fit out ($190m2 black hardwood timber floors, quality Smeg kitchen accessories, remote blinds, Hydronic heating to name a few) as it was meant to be a long term home at the time for myself. The floors alone would give me nightmares and sleepless nights thinking if the abuse they would be receiving. 

I see they're looking at legislation to allow 'long term', 5 year leases to be made available to give tenants 'security'. Can you imagine trying to have someone removed 12 months into a 5 year lease?? Not a hope in hell. 

I, as many are, as far from the proverbial rich investor so the legislation put in place to prevent just this only seems to put pressure on those trying to get ahead by frugal investing and sacrifice. 

 

Thank you for your wealth of information on the subject Elvis. Extremely informative!

[ncc1701d]

What if you buy in Aus without the need to rent it out or no intentions of selling? Are there extra things a non resident has to pay for regarding owning property? (I’ve been out of aus for over 20 years and was thinking of getting some small flat in surfers, not renting it and no plan of selling)

[moojar]

18 hours ago, ncc1701d said:

What if you buy in Aus without the need to rent it out or no intentions of selling? Are there extra things a non resident has to pay for regarding owning property? (I’ve been out of aus for over 20 years and was thinking of getting some small flat in surfers, not renting it and no plan of selling)

Apart from the obvious like council rates, strata fees and insurance - which would total at least a few thousand dollars a year even for a cheap place - there was a "vacancy tax" measure in this year's federal budget.

 

https://www.domain.com.au/news/federal-budget-2017-foreign-home-buyers-hit-by-vacancy-tax-and-restrictions-20170509-1nxugk/

 

Quote

One measure to be introduced from Tuesday is for foreign buyers to be slugged a fee for having a property that sits empty for six months or more in a year.

 - the article was published in May.  

 

I haven't taken a lot of notice, other than knowing this is another measure aimed at Chinese investors.  It's another net for expats to get caught up in though.  

[ELVIS123456]

19 hours ago, moojar said:

Apart from the obvious like council rates, strata fees and insurance - which would total at least a few thousand dollars a year even for a cheap place - there was a "vacancy tax" measure in this year's federal budget.

 

https://www.domain.com.au/news/federal-budget-2017-foreign-home-buyers-hit-by-vacancy-tax-and-restrictions-20170509-1nxugk/

 

 - the article was published in May.  

 

I haven't taken a lot of notice, other than knowing this is another measure aimed at Chinese investors.  It's another net for expats to get caught up in though.  

Owning a small place in Aust while living overseas is something that could be done in order to maintain residency for Tax purposes. I am thinking about that for when we return to Thailand, once the pension is approved. As per earlier posts, there is no way I would ever rent it out due to the costs/problem issues - but also, if you do rent your home while away OSeas, then ATO will immediately determine you are a non-resident (and tax all rent from $1 - no tax free threshold .

 

But in order to maintain residency, not only do you have to keep a home (and family ties etc) you also have to return regularly (exact number is unknown, but 1-2 times a year seems OK to ATO).  And you should also not stay in the same place (premises) overseas for more than 2 years.  But even if you do that and maintain residency, the issue then becomes the tax benefit of being a resident, versus the costs of maintaining the property (rates, insurance, etc etc) and of course the worry (theft, damage, floods and fires etc).  The ideal would be to have a relative/friend stay there rent free (but pay rates), and then pop back there once a year.  Maybe get a small demountable place in a caravan park in a beach area (relos/friends could stay there for holidays to keep an eye on it).  Line ball for me at the moment - will look into it more when I am closer to returning to Thailand (and watch the goal posts as they move).

 

 

[4MyEgo]

On 19/09/2017 at 11:21 PM, MadMuhammad said:

And this is another reason for me to sell my property before I leave in 18 months. I've had family and friends, and I've noticed a majority on TV as well, say 'keep your property in case you want to return one day' or 'the rental is a great income.'

One reason I'm selling up before leaving is that the capital gains I will have made on the property by that time will take me 15+ years to realise through rental (not including expenses such as rates, property management, repairs etc) and the money will be of much more use deposited in my share portfolio.

Now that I've seen this I have even more reason to go ahead with the sale.

The Australian government loves overspending then moving the goal posts on the common man to make up the shortfall.

Just remember, this has not passed legislation yet, however, I did the math, i.e. to hold or to sell. To hold, you will pay 32.5c in every dollar and capital gains tax will apply from the day you leave, not after 183 days, they back date it.

 

Look at other alternatives, leaving the money in the bank, if you do that, split it into a few banks, i.e. no more than $250,000 in one bank, as the government will only guarantee that amount per bank, and if you advise the bank you are a foreign resident, they will deduct the withholding tax of 10% of the interest payment, when interest is paid.

 

No tax is payable if you invest in shares in Australia, although the shares have to be fully franked (tax already paid), when you receive the dividend (return), and there is no capital gains tax.

 

So you might want to talk to a financial adviser or a broker, e.g. a $500,000 investment on low risk blue chip shares can return you between 5%-6% per year, that's above 50,000 baht per month to live on in Thailand, and a no brainer.

 

Depending on your age, watch out for the old age pension rules too, i.e. the threshold, and if you will have to return and sit for 2 years, if you intend to return to collect it, as opposed to staying there until you get it before you leave.

 

Knowledge is a powerful tool, keep researching and asking questions, because without a plan, you have no plan.

[4MyEgo]

On 20/09/2017 at 1:13 PM, ncc1701d said:

Unless I’m reading it wrong, I’m not sure why they call it a “capital gains tax” when the taxable amount is taken from the full sales price - regardless of what it was bought for.

 

https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Calculating-a-capital-gain-or-loss/Capital-gains-withholding--Impacts-on-foreign-and-Australian-residents/

I think your reading into something different, this applies to overseas foreign residence purchasing an investment property, from the way I read it, i.e. they pay the 12.5% withholding tax before the settlement proceeds are dispersed, so as to get something in return as opposed to nothing in return, until they do their tax returns, if ever.

[4MyEgo]

On 22/09/2017 at 10:59 AM, moojar said:

 

You get to deduct any costs from the sale price.  Costs like the purchase of the property, stamp duty, real estate commission, auctioneers fees etc.. 

 

But under this budget measure you pay tax on the total profit - no discount.  (And because you are non-resident, no tax-free threshold.)   If you sell a $200k property for $500k as a resident, assuming $20k in other deductibles, you pay tax on 50% of the $280k profit - the 'capital gain'.  So you pay tax on $140k.  As a non-resident you'd pay tax on 100% of the profit - pay tax on $280k.

 

BTW, the ALP has a policy of sharply reducing the CGT discount (to 25%), and for abolishing negative gearing.  They are well ahead - 8 points ahead - in the polls, and there's an election due by late 2019. Young people are screaming on social media for neg gearing to be abolished, so it's going to happen.      

       

I can't see negative gearing being abolished by Labor, it would kill the property market all together, if you recall what happened prior to the reintroduction of negative gearing by the then Hon Mr Paul Keating, adding capital gains tax to ease the situation.

 

How many mums and dads do you think own an investment nest egg, if they cannot offset the interest payments, and claim on all of the rates, levies, repairs and have to pay capital gains tax, its a no brainer, they will sell, sell, sell, and the market will tumble, probably not a bad idea.

 

Sydney, has become ridiculously expensive, i.e. when I purchased my first place in 1984, it cost me $41,500 AUS, the same property today would cost you about 15 times that, and the increase in value to $622,500 is $745 a week net after deducting the original purchase price of $41,500.

 

A young person of say 24 of which I was at the time, would have to repay about $500 per week after putting down a 12% deposit, add outgoings such as water, council and strata levy payments, so they would be damned if they did, or damned if they didn't because the rental amount would be the same as the mortgage repayment, call it forced savings if you like.

 

Personally Thailand is a better alternative 555

[4MyEgo]

On 22/09/2017 at 9:42 PM, MadMuhammad said:

The bad tenant is one of my biggest fears. My townhouse has a high end fit out ($190m2 black hardwood timber floors, quality Smeg kitchen accessories, remote blinds, Hydronic heating to name a few) as it was meant to be a long term home at the time for myself. The floors alone would give me nightmares and sleepless nights thinking if the abuse they would be receiving. 

I see they're looking at legislation to allow 'long term', 5 year leases to be made available to give tenants 'security'. Can you imagine trying to have someone removed 12 months into a 5 year lease?? Not a hope in hell. 

I, as many are, as far from the proverbial rich investor so the legislation put in place to prevent just this only seems to put pressure on those trying to get ahead by frugal investing and sacrifice. 

 

Thank you for your wealth of information on the subject Elvis. Extremely informative!

Long term residential leases have always existed, if over 3 years, you had to register them and pay the duty.

 

Just so everyone knows, if a tenant requested a year lease with a year option, it automatically becomes a two year lease in the tenants side of things, i.e. the tenant can say after one year, don't want to exercise my option, provide the normal vacating notice and walk, whereas the landlord could't say to the tenant I grant you the extra year if the tenant wanted to stay, as its automatically a two year lease, and no rental increases can be made during the period of two years, unless it is spelt out in the lease, i.e. the tenant agrees by signing this lease that the rent will increase by $20, and notice to that effect will also have to be given to the tenant 60 days before the rental increase. 

[4MyEgo]

On 22/09/2017 at 9:49 PM, ncc1701d said:

What if you buy in Aus without the need to rent it out or no intentions of selling? Are there extra things a non resident has to pay for regarding owning property? (I’ve been out of aus for over 20 years and was thinking of getting some small flat in surfers, not renting it and no plan of selling)

As far as I am aware, capital gains tax will commence from the day you purchase it, leaving it empty would be like putting your money in a bedside table draw, earning nothing, at least renting it, you would be getting something for it after the 32.5c in the dollar foreign resident tax, and all outgoings, vacancy factors.

 

Better of putting your money in share, no tax if they are fully franked and no capital gains tax for foreign residents, at least you will be making a coin from dividends while your capital fluctuates, hopefully in the upward direction mostly 555

 

They are also looking at slugging investors a flat rate of say $5,000 for leaving properties empty, but am sure they will have a scale on that, in the upwards direction.

Edited September 24, 2017 by 4MyEgo

[ncc1701d]

6 hours ago, 4MyEgo said:

As far as I am aware, capital gains tax will commence from the day you purchase it, leaving it empty would be like putting your money in a bedside table draw, earning nothing, at least renting it, you would be getting something for it after the 32.5c in the dollar foreign resident tax, and all outgoings, vacancy factors.

 

Better of putting your money in share, no tax if they are fully franked and no capital gains tax for foreign residents, at least you will be making a coin from dividends while your capital fluctuates, hopefully in the upward direction mostly 555

 

They are also looking at slugging investors a flat rate of say $5,000 for leaving properties empty, but am sure they will have a scale on that, in the upwards direction.

I haven’t lived in aus for over 20 years and don’t really plan on returning full time. (I don’t live in Thailand either, that’s just where my gf lives and I visit regularly). But my kids are in aus and I’m a bit sick of Airbnb every time I want to come visit them. So was thinking of getting a place to use when I come down for a week or two every few months. So I wouldn’t be able to rent it out. 

 

My my brother just said he thinks that’s in relation to off the plan developments... i’ll Have to take a closer read. Appreciate the info though.

[4MyEgo]

44 minutes ago, ncc1701d said:

I haven’t lived in aus for over 20 years and don’t really plan on returning full time. (I don’t live in Thailand either, that’s just where my gf lives and I visit regularly). But my kids are in aus and I’m a bit sick of Airbnb every time I want to come visit them. So was thinking of getting a place to use when I come down for a week or two every few months. So I wouldn’t be able to rent it out. 

 

My my brother just said he thinks that’s in relation to off the plan developments... i’ll Have to take a closer read. Appreciate the info though.

I strongly believe that if you look into things you will find out that as you haven't lived in Australia for over 20 years, you are considered a foreign resident for tax purposes, although you retain you Australian Citizenship, and if you buy something to live in and still reside overseas for more than 183 days, you will be taxed a rate ($) for leaving it empty and full capital gains tax.

 

The government doesn't want any foreign residents, which includes any Ozzie who is out of the country for more than 183 days to own property, i.e. unless they can prove that Australia is actually their abode, i.e. place of residency, there is a number of hoopla hoops one has to jump through to prove they are Australian residents, and in my opinion, is not worth the headache.

 

What I would suggest if your kids own a house, maybe suggest to them that you build a granny flat at the back for when you are back, and it becomes theirs in the future, you just want a place to crash, you could probably built in it for around $80,000, there is no stamp duty payable as your not buying it, just got to make sure the kids don;t mind you being in their back yard from time to time, and the granny flat could increase the value of their home in the future, as they could rent it out and earn money from it, however they will have to pay tax and a portion of capital gains tax.

 

Just a thought, but you have to weigh up the pro's and con's, because $80,000 is a big outlay, and if your not going to be using it often, it might defeat the purpose, unless the kids rent it out in your absence and pay the tax for you, but also make it available for you when you return, kind of an Airbnb arrangement, you could even tell them you will split the dollars with them.

[MadMuhammad]

11 hours ago, 4MyEgo said:

Just remember, this has not passed legislation yet, however, I did the math, i.e. to hold or to sell. To hold, you will pay 32.5c in every dollar and capital gains tax will apply from the day you leave, not after 183 days, they back date it.

 

Look at other alternatives, leaving the money in the bank, if you do that, split it into a few banks, i.e. no more than $250,000 in one bank, as the government will only guarantee that amount per bank, and if you advise the bank you are a foreign resident, they will deduct the withholding tax of 10% of the interest payment, when interest is paid.

 

No tax is payable if you invest in shares in Australia, although the shares have to be fully franked (tax already paid), when you receive the dividend (return), and there is no capital gains tax.

 

So you might want to talk to a financial adviser or a broker, e.g. a $500,000 investment on low risk blue chip shares can return you between 5%-6% per year, that's above 50,000 baht per month to live on in Thailand, and a no brainer.

 

Depending on your age, watch out for the old age pension rules too, i.e. the threshold, and if you will have to return and sit for 2 years, if you intend to return to collect it, as opposed to staying there until you get it before you leave.

 

Knowledge is a powerful tool, keep researching and asking questions, because without a plan, you have no plan.

I already have a substantial holding in a balanced share portfolio that is currently comfortably returning the equivalent of 100Kthb+ monthly without touching my capital but I'd be hesitant in parking more funds there as I feel I'd be over invested no matter how diversified it is.

 If and when it comes to making the move I feel that selling will be my best option. My quoted rental income would be approx $2400pcm so the tax alone would not be insignificant and the same for CGT should I choose to rent and sell at a later stage. 

Being a new home (under 2 years old) I think it would be difficult to claim maintenance etc to offset some tax and as the home is paid off negative gearing is out of the question.

 

A worry I now have it where else to park my sale of home funds that will give me a decent but safe return while still making the money work for me.  Bank term deposit rates a extremely low right now and really aren't ideal. 

 

I'm 39 but considering my circumstances I have no intention of returning to attempt to claim the age pension and with my assets I exceed the threshold any way. In saying that I could think of nothing worse than being forced to return for 2 years to wait out the time needed.

 

I have been speaking to my accountant, finance broker, friends that have made the move previously and I do a lot of my own research. I've posted a bit on TV with some success (people like Elvis and yourself) and I'm always open to any suggestions and advice I can get so please fire away if you please.

[4MyEgo]

8 hours ago, MadMuhammad said:

I already have a substantial holding in a balanced share portfolio that is currently comfortably returning the equivalent of 100Kthb+ monthly without touching my capital but I'd be hesitant in parking more funds there as I feel I'd be over invested no matter how diversified it is.

 If and when it comes to making the move I feel that selling will be my best option. My quoted rental income would be approx $2400pcm so the tax alone would not be insignificant and the same for CGT should I choose to rent and sell at a later stage. 

Being a new home (under 2 years old) I think it would be difficult to claim maintenance etc to offset some tax and as the home is paid off negative gearing is out of the question.

 

A worry I now have it where else to park my sale of home funds that will give me a decent but safe return while still making the money work for me.  Bank term deposit rates a extremely low right now and really aren't ideal. 

 

I'm 39 but considering my circumstances I have no intention of returning to attempt to claim the age pension and with my assets I exceed the threshold any way. In saying that I could think of nothing worse than being forced to return for 2 years to wait out the time needed.

 

I have been speaking to my accountant, finance broker, friends that have made the move previously and I do a lot of my own research. I've posted a bit on TV with some success (people like Elvis and yourself) and I'm always open to any suggestions and advice I can get so please fire away if you please.

39 and already receiving 100,000k baht per month, wow, your already set up. Where to park the sale proceeds is going to be the big ?

 

Do you have any family member/s that you can trust, e.g. transfer the property to them, with you having a 1% stake in it on title and a caveat with them owing you the value of the property, that way if the member/s try to sell it, you will know before hand, and will also have to be paid out the money owing to you, your accountant/solicitor should be able to advise on these, and the caveat can be increased as the market increases.

 

Yes tax will be payable on the income at Australian tax rates, so preferably the family member wouldn't be working to get the $18,200 threshold, and yes there will be capital gains tax payable when its sold, but they (you) would get the 50% CGT reduction after renting it for over 12 months.

 

Stamp duty will be payable on the transfer, that is the downside, but if you work out the savings in tax and capital gains tax, it might be doable.

 

Apart from that, you sell it, park it in the bank, yes low rates 2.5%-3%, but will eventually go up at a slow pace.

 

That's all I can think of for now unless you want to throw it into Bitcoin....lol

[MadMuhammad]

2 hours ago, 4MyEgo said:

39 and already receiving 100,000k baht per month, wow, your already set up. Where to park the sale proceeds is going to be the big ?

 

Do you have any family member/s that you can trust, e.g. transfer the property to them, with you having a 1% stake in it on title and a caveat with them owing you the value of the property, that way if the member/s try to sell it, you will know before hand, and will also have to be paid out the money owing to you, your accountant/solicitor should be able to advise on these, and the caveat can be increased as the market increases.

 

Yes tax will be payable on the income at Australian tax rates, so preferably the family member wouldn't be working to get the $18,200 threshold, and yes there will be capital gains tax payable when its sold, but they (you) would get the 50% CGT reduction after renting it for over 12 months.

 

Stamp duty will be payable on the transfer, that is the downside, but if you work out the savings in tax and capital gains tax, it might be doable.

 

Apart from that, you sell it, park it in the bank, yes low rates 2.5%-3%, but will eventually go up at a slow pace.

 

That's all I can think of for now unless you want to throw it into Bitcoin....lol

I do have a family member that’s extremely trustworthy (dear old Mum) but unfortunately the asset test for her age pension would make it impossible for her to hold another property. 

 

I haven’t really investigated any further options as yet as I’m still in the early planning stages regarding the property, I do appreciate the information you have so kindly given here. Definitely some food for thought. Looks lols it’s time to put some notes together and have book a face to face with the accountant.

 

I’m feeling parking cash in the bank initially will be the best option, take some time to reassess. It doesn’t get great returns but it’s safe and reliable until I can come up with a new strategy.

Bitcoin hahaha! I don’t mind gambling but that is one I’m just not prepared to take lol

 

thanks again for the detailed advice, I’m very appreciative you took the time to comment.

 

 

[4MyEgo]

4 hours ago, MadMuhammad said:

I do have a family member that’s extremely trustworthy (dear old Mum) but unfortunately the asset test for her age pension would make it impossible for her to hold another property. 

 

I haven’t really investigated any further options as yet as I’m still in the early planning stages regarding the property, I do appreciate the information you have so kindly given here. Definitely some food for thought. Looks lols it’s time to put some notes together and have book a face to face with the accountant.

 

I’m feeling parking cash in the bank initially will be the best option, take some time to reassess. It doesn’t get great returns but it’s safe and reliable until I can come up with a new strategy.

Bitcoin hahaha! I don’t mind gambling but that is one I’m just not prepared to take lol

 

thanks again for the detailed advice, I’m very appreciative you took the time to comment.

 

 

Your most welcome, if you do park it in the bank, just remember no more than $250,000 per bank, i.e. CBA, Westpac, Nab, etc etc, as that's the limit the government will guarantee per bank.

 

Also advise the bank after 183 days that your residency status has changed and for them to withhold the 10% withholding tax.

 

If you plan it well the first time, you might get away with being an Australian resident for 365 days in the first year, i.e. leave Australia at the end of December and return before the 30th June, as the clock usually kicks in at the beginning of the financial year, so if your out end of year and back before the new financial year commences, it might be worth it to you for your taxes ending in that financial year as well, as you would retain your residency status for that financial year, and when you leave again in the new financial year, your residency status will change after 183 days, if that makes sense.

 

Make sure you also book the ticket as a return ticket for that period, so as to say it was an extended holiday, if anyone asks, because it will be under the 183 days, more food for thought.

 

Good luck with it all

[ncc1701d]

Good grief. No wonder I left aus. It’s such a pita. Eldest kid is 14, I’ve not confirmed, but am told they have to be 16 to buy property. Will find out about that and what negative impact it may have on them later. No way do I want to be considered a resident for tax purposes - that’s the benefit of being non resident. Thanks for the info 4MyEgo ??

[MadMuhammad]

15 hours ago, 4MyEgo said:

Your most welcome, if you do park it in the bank, just remember no more than $250,000 per bank, i.e. CBA, Westpac, Nab, etc etc, as that's the limit the government will guarantee per bank.

 

Also advise the bank after 183 days that your residency status has changed and for them to withhold the 10% withholding tax.

 

If you plan it well the first time, you might get away with being an Australian resident for 365 days in the first year, i.e. leave Australia at the end of December and return before the 30th June, as the clock usually kicks in at the beginning of the financial year, so if your out end of year and back before the new financial year commences, it might be worth it to you for your taxes ending in that financial year as well, as you would retain your residency status for that financial year, and when you leave again in the new financial year, your residency status will change after 183 days, if that makes sense.

 

Make sure you also book the ticket as a return ticket for that period, so as to say it was an extended holiday, if anyone asks, because it will be under the 183 days, more food for thought.

 

Good luck with it all

Totally understood and again appreciated!

[4MyEgo]

On 26/09/2017 at 1:13 AM, ncc1701d said:

Good grief. No wonder I left aus. It’s such a pita. Eldest kid is 14, I’ve not confirmed, but am told they have to be 16 to buy property. Will find out about that and what negative impact it may have on them later. No way do I want to be considered a resident for tax purposes - that’s the benefit of being non resident. Thanks for the info 4MyEgo ??

If your looking at buying in the next 5 years, I would say, don;t waste your money, because in Sydney for example, the market was heading up for 5 years solid since September 2012, and against what most would suggest, I am saying there will be at least 20% shaven off the bone in the next 5 years, if not more in the unit market, e.g. oversupply, and most banks won't lend more than 50% on units, because they can see what's coming.

 

Here is an interesting article regarding legal ages, 16 can do, but if its done in a trust, it could add future capital gains taxes to the property, so best talk to an accountant.

 

http://www.theaustralian.com.au/business/wealth/your-questions/the-coach-property-for-children/news-story/8c70d31829d015833de6fdbf1feb2da1

[jack2964]

I left in end 2005 and am a non resident as far as the ATO is concerned. Been paying my taxes annually for income derived from an investment property which I still owe money on. Seeing how the ato as well as the nsw govt keep moving the goal post  I am seriously considering liquidating and parking the proceeds elsewhere.  Paying 45% on every dollar above 180,000 on taxable income is extremely painful. I guess they have somewhat achieved the aim to discourage foreign investors but those with deep pockets aren't affected. To the average Joe like myself even future capital growth isn't an incentive to hold on. For every 10k of capital growth, 4.5k goes to the ATO.

[moojar]

^ As a "foreigner" Jack, do you still get a deduction for your costs like loan interest and agents fees etc.?  Or is it a straight '$30k in rent = $10k-ish in tax'?