e3geek

Hi guys,

Anyone here from Australia? I am moving to US soonish, and have this property in Sydney which I plan to rent out. I am looking for similar experienced from other members who are living in US and have properties in OZ.

How do I pay tax on the rent I collect and can I write-off all the interest I pay from my US tax? How would that work out.

Thanks

Pulaski

I'm not from Australia, but yes, you can write off the interest on your mortgage payments, but not the part of the payments that is capital. You can also claim depreciation of the capital purchase price attributable to the building, but not the part attributable to the land. Depreciation is over 40 years. So if you paid US$240,000 for the house, of which US$40,000 was for the land, you could claim depreciation of US$200,000/40 /yr against your income from the property. Depending on your rental income, allowable expenses, including management fees, property taxes, repairs and maintenance, and depreciation, you might not actually have any taxes to pay. I do not know if you might have any income taxes to pay in Australia; if you do, they would be a credit against US taxes against the property income.

You should consult a tax accountant experienced in international taxes to ensure that everything is properly calculated to IRS rules because there are several complicating factors, including exchange rates, and historic figures from when you first purchased your house.