Mortgage in oz or NZ? and tax benefits

[cangel]

New to this site, and have heaps to learn, but was wondering which country to get a mortgage in. Either NZ or Australia. Currently we have one small property in NZ and one in Aus. I live and work in NZ and partner currently in Aus. We are in the process of buying a property in rural NZ which is 2 houses on one title. One of the houses is a backpackers and we will live in the other one. And rent out the other two properties. Realising the interest rates are better in Aus, would we still be able to depreciate/offset them against our NZ tax? (I will be earning a wage and partner paid from backpackers proceeds.) And what would be the tax benefit of keeping the Australian property?
Thanks for any info.

[CJ]

Two things:

Forex risk - While the interest rate might be lower, what happens if the forex moves and you end up owing more than the value of the house. It might go the other way of course but as our currency continues to climb, more and more people are saying it will fall. To date, all have been wrong but over the term of a loan??

Tax - If you have the loan in another currency, for NZ purposes it will be deemed a financial arrangment and you will pay tax on forex movement. You could gain or you could lose. There is a way to get around it I think if you use a NZ bank to give you an Austrlian denominated loan (you will have to check this with an accountant but this was done in reverse when people were buying property in the gold coast.

To make it simple, i would get a NZ loan. It you want to play the forex market as well as the housing market, you could think about an Aust loan, or for even lower interest rates, why not get a Hong Kong loan through HSBC.

[gobindpal]

Hi
if you want to take risk with forex and are looking for cheaper loans than at the moment, from my best knowledge is, Yen loans are the lowest interest bearing loans.
You can look around with foreign banks and also offshore banks who can arrange for this types of loans

[roseneath_rat]

Be wary of the size of the forex risk, at the size of dollars you are looking at it is unlikely to be feasible to find hedging contracts.

The risk is definitely on the upside for the asian currencies, the NZD is still overvalued. Can you sustain a 20% increase in the cost of funds?

Cangel you probably need to see a tax specialist to work through the intricacies of NZ/AUS structures & tax pitfalls.