NZ to Australia negative gearing question

[inaussie123]

Hi all,

own some NZ rental properties brought when living and working (am Kiwi) in NZ some years ago.

still own them today, but live and get 100 % of personal income (outside of nz rentals) from Australia, so am Australian resident for tax purposes.

nz properties are negatively geared - do i receive nz tax credits or can i offset my australian income with the NZ losses?

thanks in advance

[Rosco]

This is really an Aussi tax question, so not quite my area.

But my understanding is that yes you can offset the NZ loss against your Aussi personal income, as long as the NZ rentals are owned in your personal name.

No tax credits or refunds in NZ, as you don't pay any tax here.

But you will get a loss to carry forward that will be building up in NZ. So if you come back in a few years, you might get to earn some of your first years salary tax free!

Ross

[kiwoz]

Hi inaussie,

I'm in a similar situation to you, a kiwi living in Australia and I have a few investment (i use that word loosely) properties in NZ. These properties are negatively geared against my Australian income.. no problems with this, however, you need to be aware of CGT in Australia because you will be liable for this as an Australian tax resident. This means that if you either sold one of your properties in NZ or ceased being a tax resident of Australia at any time in the future you would have to pay the apportioned (if that the right word) amount of CGT. for example.. if you were to move back to NZ to live you would lodge at tax return in Australia and based on the property value at that time pay CGT based on the increase in value whilst you weer an Australia tax resident.

So whilst negative gearing is possible you need to also be aware of other tax implications. Also, I'm not an accountant so I advise you to get advice form someone more qualified. I use Bantacs accountants in Australia who are quite good..

Cheers

[Daniel A]

Do your NZ April to march tax return and then bring that over and include it your return in Au. You can carry forward any losses.

But as Kiwoz said CGT is a real issue later if you move back. It could cost you tens if not hundreds of thousands of $$$$ depending how long and how many propertys you have.

[freeloader]

don't forget you can still claim depreciation in au.

[andyl12]

This is really an Aussi tax question, so not quite my area.

But my understanding is that yes you can offset the NZ loss against your Aussi personal income, as long as the NZ rentals are owned in your personal name.

No tax credits or refunds in NZ, as you don't pay any tax here.

But you will get a loss to carry forward that will be building up in NZ. So if you come back in a few years, you might get to earn some of your first years salary tax free!

Ross

Hi Kiwoz, my situation is the opposite- me and my wife may move to NZ and we want to know if our Australian property (in which we currently live) could be rented out and negatively geared against the income we get from our jobs in NZ. And what would the CGT implications be, assuming we become permanent NZ residents and never come back?

[Rosco]

Hi Andy,

Yes. Once you become a tax resident in NZ, then you will need to return your worldwide income in NZ.

So you would return the income and expenses for the rental in Australia. Then convert to NZ dollars, update the depreciation and any other deductions to NZ rules, then return the profiit / loss in your NZ tax return.

If the property is running at a loss, you would offset against your NZ PAYE income and get a tax refund in NZ.

Ross

[andyl12]

Hi Andy,

Yes. Once you become a tax resident in NZ, then you will need to return your worldwide income in NZ.

So you would return the income and expenses for the rental in Australia. Then convert to NZ dollars, update the depreciation and any other deductions to NZ rules, then return the profiit / loss in your NZ tax return.

If the property is running at a loss, you would offset against your NZ PAYE income and get a tax refund in NZ.

Ross

Thanks Ross. But I'm assuming that even if the tax deductions are assessed in NZ, the eventual Capital Gains Tax on the sale would be assessable in Australia, regardless of where I'm living?

[Rosco]

Hi Andy,

Not quite my area of expertise. This would be an Aussi tax question.

I would guess that Capital Gains Tax would be payable in Aussi.

Ross