Oz investment property when living in UK
 

So when living in Oz you can negative gear an investment property against your income, but if you are living in the UK can you still negative gear if you have no Oz income coming in?

Just thinking if its worthwhile or the worst investment ever.

Re: Oz investment property when living in UK
 

No you can't because you fall under UK tax law which doesn't allow negative gearing.

Re: Oz investment property when living in UK
 

i.e. losses get carried forward to be set against future profits under UK tax law.

Re: Oz investment property when living in UK
 

Thanks Louie. What do you exactly mean by this? Can you provide an example?

Reason for asking, as a ping pomer I feel it may be a good idea to have a place in both the UK and Australia for the future. Affordability is fine for us. We could do both now in our midlife. Having a UK investment property living in Oz would work. Rental income is currently close if not better than mortgage repayments .... depending on how much we slap down. But if it were the other way around and we were living in the UK and had an investment property in Oz the return in rent is so much lower than a mortgage repayments. This is where NG would kick in but to the best of my knowledge you would have to have other sources of Oz income to offset the loss against. ... right? So in theory ..... my theory sucks right?

Re: Oz investment property when living in UK
 

You can't negatively gear loss-making property anywhere in the world against UK income.

BB

Re: Oz investment property when living in UK
 

I don't think you can negatively gear anything against UK income. Thats where I believe it wouldn't work. But if you were living in the UK, had an Oz investment property, and had another source of Oz income where you were paying Oz tax against, you may be able to offset against that?

How do all these foreign (mainly chinese) investors do it?

Re: Oz investment property when living in UK
 

Foreign investors do not pay tax in Australia on non-Australian earnings so they would not be able to negatively gear.

If you had an alternative income in Australia you would definitely be able to gear against it, assuming it was large enough to attract tax in the first place.

BB

Re: Oz investment property when living in UK
 

So a foreign investor, would be mortgage free, collecting their 4-8% and banking on appreciation.

I guess in my shoes, which wouldn't be mortgage free, it's a bad idea to live in the UK and have an investment property in Oz. I'd be sending a lot of money back to top up the mortgage and nothing to offset the loss against.

Re: Oz investment property when living in UK
 

This is the position in Australia. that is, you can carry forward losses so that when you do move back to aus you can write off those losses against your income here.

If you dont intend to move back and earn aud paying aud tax... then yeah, you are in it for the capital growth/forced savings/future income aspect.

Re: Oz investment property when living in UK
 

Just remember that from 8 May 2012 the Australian Government took away the 50% CGT discount applying to assets held for more than 12 months for non-residents - which makes continuing to hold an investment property in Australia less attractive in your type of situation. But, if you intend to come back to Australia and live it is probably useful to maintain some exposure to the property market as a hedge.

Suggest you get some proper tax advice - UK and Australian - before you make any investment.

Re: Oz investment property when living in UK
 

Thanks for note on the CGT. Yes I did receive some tax advice on it. Not sure it was the best advice, but the tax adviser was selling the idea of negative gearing until I brought up the idea of living outside Australia. Then the conversation stopped.

Just wondering if anyone living in the UK has an investment property in Oz and is it a loss making exercise?

I know 2 people that had investments property in Sydney for a few years but ended up selling as there more attractive propositions for tax purposes abroad.

Re: Oz investment property when living in UK
 

Are you really sure it would be loss making anyway, with the lower Australian interest rates these days? Rent lower than mortgage payment does not make it loss making, rent lower than mortgage interest expense makes it loss making.

Re: Oz investment property when living in UK
 

Absolutely. Not always a loss, especially being able to structure an interest only, offset account thing, but where I would like to have a property, rent v mortgage is not so close so if the interest rate were to increase there could be trouble.

I went and looked at a flat to rent on the weekend. Waterfront place on the harbour. Rent was 700 per week. Had a little peek at what what the owner bought it for. 1 million. That's a big difference and really a low percentage gain there.

Re: Oz investment property when living in UK
 

As Craig has said at #9, the opportunity for claiming the rental property loss is when you return to live in Australia.

Otherwise you will be funding the loss with no tax deduction to mitigate the position.

And if you turn a rental surplus you'll be paying Aus tax at 32.5% on the first $ of income, assuming you are not tax resident in Australia.

Ditto for any capital gains, with no 50% discount available these days.

Am always surprised the Aus property spruikers get properties sold. The tax breaks are far better for Aus residents who are investing overseas, particularly while the A$ is relatively strong.

Best regards.

Re: Oz investment property when living in UK
 

Good round up of info there.

I wonder how all those offshore investors (namely the Chinese) do it. OR do they just love property OR they are so insanely rich it doesn't matter.