New Zealand Property Investment

I heard that NZ's laws are very fiendly. It is a property investment heaven. Can someone tell me something about investing in NZ?

THERE ARE A LOT OF SHEEP!

Robert Bou-Hamdan
Mortgage Adviser

M: 0414 347 771
E: robert@mortgagepackaging.com.au
W: www.mortgagepackaging.com.au

FREE Finance-Related Newsletter: See - http://www.mortgagepackaging.com.au/index_files/newsletter.htm

Comments made are of a general nature and should not be construed as individual advice.

© 2004 Mortgage Packaging Pty Ltd

its true!

No poxy stamp duty on purchases, closing costs for the purchase of a property usually around $1100. I'm pretty sure there is no CGT either!

And since there are no termites in NZ there is no need for annual pest inspections and the council rates can be as low as $600 p/a.

Tho the massive influx of aussie investors and the domestic trend in NZ for realestate investment has prolly made the market less attractive as the demand has forced prices up in many areas.

Not if you are a NZ resident. Us Aussies still have to pay CGT if we sell, unless you have some creative structure setup (I think).

... and also as high as $1600 in some areas!

Regards,
Ozi

Does anybody know of website or links that list properties in NZD?

Want to join financial independence before 31 years old, currently 25

I think you need to go here http://www.propertytalk.co.nz/forums.html

______________________

I know I can, I know I can

Hullo IQ

Try http://www.realenz.co.nz

About 50000 properties listed for NZ.

Regards

also quotable value is the NZ gov valuation service www.qv.co.nz also try the RE agents sites they are many of the same big names in oz as NZ such as Ray White real estate, century 21, etc but agree with muppet best place to start is realenz.co.nz

when the going gets weird the weird turn pro

Hi
We have just returned from a property fact finding trip to Queenstown , New Zealand. We arrived home tonight so this info is current. There is no doubt that real estate investing is easy and relatively tax free in NZ compared to Aust. BUT there are some problems associated with cross Tasman investing:
1. The NZ interest rate went up to about 7.7% while we were there.
2. If you borrow money in NZ you can't take the tax losses (depreciation etc) across to Aust, so no tax benefits there for individuals (not sure about implications for companies and trusts)
3. The rent returns were not great in Queenstown - about 4% and house prices were high.
4. Property managers charge 10% - difficult to manage your own properties from a distance so you need to factor this in.
We left there a little disappointed but we had a great time doing the knowledge. Queenstown is a beautiful place and the views are spectacular. We haven't given up the idea just need to rethink the strategies. The real estate folks, accountants, bank people and solicitors we met were very helpful and made everything very simple.
cheers
Salla

Hi Salla,

I have 4 IP's in NZ.

All purchased via an Oz trust, NZ financed.

I locked in at 3 years, lock in whatever you can because the future is going to be unpredictable.

As I have been informed, I pay NZ tax on my NZ income from rentals and any profits are transferred to Oz with tax paid status.

As I own 4 properties my PMs only charge 7.5% plus GST.

Chuckle ... point 5. forget the emotions, forget the beauty, forget the wondrous scenery of Queenstown, check out the numbers, check out the viability, check out yourself... If you still want to do it then you're right.

I might fly into the wind with other people on this forum, but at the end of the day, its all up to you.

Cheers Noble One

"Making mistakes is just another another tool for learning."

Why lock in if the future is unpredictable? Interest can also go down you know?

I rarely here the NZ investors talk about the currency difference. Don't forget to factor this in!

Robert Bou-Hamdan
Mortgage Adviser

M: 0414 347 771
E: robert@mortgagepackaging.com.au
W: www.mortgagepackaging.com.au

FREE Finance-Related Newsletter: See - http://www.mortgagepackaging.com.au/index_files/newsletter.htm

Comments made are of a general nature and should not be construed as individual advice.

© 2004 Mortgage Packaging Pty Ltd

Thanks for the reply, Nobleone. Since you seem to have had your NZ investments for awhile, what would be your advice in today's market - are you still investing there? You say you have a trust and get finance from NZ, is the tax situation in Aust negating any profits you make in NZ by bringing the profits back to OZ? I am asking lots of tax questions because this is the crucial factor for us, we pay large income tax and need tax minimisation in order to crunch the numbers in favour of investing offshore. As I understand it, having a trust won't help us to reduce PAYE tax.We have considered living in NZ for 6 months- this might be a lifestyle and profit solution. Steve's equation: problem + solution = profit. Any suggestions? Selling the PPOR is our first step in OZ.

Hi The Mortgage Adviser,

Of course interest rates can go down as well as up... But I locked in now because I KNOW that at the locked in rate I can afford the repayments and still make a good profit each month.

Once 3 years has passed I will be in a much more secure financial position so it does not worry me where interest rates will be at that point in time.

Why gamble on up or down when you know you can win if you stay where you are?

Hi Salla,

Yes I am always looking, but I will only buy if the gross return is 10% or more, 12% to 14% would be preferable.

I'm no tax specialist and my set up works for my circumstances, I followed the advice of my OZ accountant as he is a property investor himself, he looked at where I am financially and where I want to be and told me the best set up for my circumstances.

He tells me that once I've paid tax on earnings in NZ then monies transferred to OZ come in as tax paid.

You really need to talk to a tax expert who can evaluate your financial situation.

This does not really explain in any better detail, maybe another forumite can help more that I.

Cheers, Nobleone

"Making mistakes is just another another tool for learning."

"3. The rent returns were not great in Queenstown - about 4% and house prices were high."

Yes, and you'd say the same about Byron bay, if you get my drift - which is, yes, beautiful, yes, desirable, yes, demand, yes, capital gains, yes, lifestyles of the rich and famous, and yes, negative gearing.

but if you want that kind of investment you don't have to cross the Tasman to get it. (although there is no Queenstown equivalent in Aus!)

The investments that are still available in NZ which Aus does not have is CF+ve properties in decent towns within cooee of larger towns, at at a very low price compared to Aus. Yes, of course there is still capital gains potential all over NZ.

Buy now for CF+ve where future demand is expected to grow, i.e. a town where a huge factory is being built, where a major business is expanding, etc.

To find this sort of stuff out, you will either have to keep your ear to the ground for a while (NZ news sources, magazines, etc) or else leverage off someone who has that information.

joy to the world

Hi all
Salla, Queenstown is a very expensive town to live in,I've been here nearly three yrs and have seen prices here go crazy.Sections are still pretty good value considering the views but the cost of building in this area is way too high.
Rents are high and peak in the winter when it's next to impossible to find a flat.It's hard to say if house prices here are going to keep rising,Queenstown in the past has been a very boom/bust town but with pop growth of around 20% and huge increases in tourism it's likely prices will plato instead of bust.
One area which gives high returns here is holiday letting with many good quality homes letting at $250-$500 a night, some up as high as $1000/night.
You can expect to get an average of $200+ for 180 days of the yr.management for these usually is about 20%.
regards Queenstowner

noble one
He tells me that once I've paid tax on earnings in NZ then monies transferred to OZ come in as tax paid.

You will have to pay the difference between Aussie tax and Nz tax since NZ tax is lower...... can anyone confirm this?

Paying tax in Australia: this is general but here goes: Aussies pay tax on all personal worldwide income - whether or not they actually bring the money into the country - so if you have a profit or income in NZ and leave it there, the aussie ATO still requires you to declare it and pay tax on it if it is yours personally.
Yes the money is tax paid in NZ - but if you only paid say "5cents" in the dollar tax in NZ, the ATO will check what your marginal rate here is and tax you the difference so if you pay 47c in the dollar, then you will pay the ato 42c for your NZ income - gotta love the ATO......

CastleDreamer
NZ Investor and Property Spotter