Tax Regime When Buying in Australia as a Non- Resident
There are generally two types of "Non Resident" buyers:
-Australian citizens living abroad; approved migrants; and Permanent Residents living overseas
-None of the above i.e a foreign purchaser
AUSTRALIAN CITIZENS, APPROVED MIGRANTS, AND PERMANENT RESIDENTS (PR's)
Non-residents of Australia pay tax differently from residents when buying investment property.
As a non-resident you will pay tax only on all income earned in Australia. USUALLY AS A NON-RESIDENT THIS MEANS YOUR RENTAL INCOME on any Australian property investments. It is important to note that if you have no other AUSTRALIAN INCOME, OR SALARY, YOU WILL ONLY PAY TAX AT THE LOWEST RATES.
This is very different from Australian citizens, who have their rental income added to their personal income, which can push them into a higher tax scale. The main difference is that you don't enjoy the tax free threshold that residents do.
It is important to note that if your expenses (including paper expenses such as depreciation) exceed your rental income then no income tax is levied.
As a non- resident investor, this annual "loss" may be carried forward indefinitely to offset future Australian rental income, personal income taxes, or capital gains taxes.
This is a very important benefit for those going to live in Australia, as it means they can potentially reduce their personal income tax after they arrive to rates not unlike those in HK and Singapore.
This is not available to residents living in Australia who must use these losses in the year incurred against personal income.
As the Australian taxation system is federal based, any loss made on one property can offset the income or capital gain of another property regardless of the property’s location in Australia.
New migrants and expats going back to Australia after living overseas can literally save tens of thousands, if not hundreds of thousands of dollars, by following the correct investing strategies before arriving.
For more information, download the tax free investing report by going here.
FOREIGN BUYERS:
Foreign buyers will pay tax exactly the same on their property purchases as Australians living outside of Australia, and as approved migrants do, with one important difference.
As a non-resident foreign buyer you will pay tax only on all income earned in Australia. USUALLY AS A NON-RESIDENT THIS MEANS YOUR RENTAL INCOME on any Australian property investments.
It is important to note that if you have no other AUSTRALIAN INCOME, OR SALARY, YOU WILL ONLY PAY TAX AT THE LOWEST RATES.
This is very different from Australian citizens, who have their rental income added to their personal income, which can push them into a higher tax scale. The main difference is that you don't enjoy the tax free threshold that residents do.
It is important to note that if your expenses (including paper expenses such as depreciation) exceed your rental income then no income tax is levied.
As a foreign investor, this annual "loss" may be carried forward indefinitely to offset future Australian rental income or capital gains taxes.
This is an important benefit, not available to residents living in Australia who must use these losses in the year incurred against personal income.
As the Australian taxation system is federal based, any loss made on one property can offset the income or capital gain of another property regardless of the property’s location in Australia.
The main difference foreign buyers have is the additional stamp duty foreign buyers have to pay which varies from state to state.
For more information, download the tax free investing report by going here.
