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Thanks Guys,
Just had the place appraised and as it turns out it isn’t worth selling at this point so I’m left with needing to rent it out. When the unit was first advertised the agent tried getting the rent up from where it was and we have reduced it from there since. It’s now currently be advertised for only $5 more than what I was getting from the last tenants. Is it worth going backwards in rent?
I have for a long time now been unhappy with the agent but tried persisting because he’s always been the agent. Now doesn’t seem to be the right time at all to change agents or is it?
I can’t think of anything else that could be an incentive to get it rented any faster. I’ve just refurbished the place inside and out and it in a very tidy state. The only thing I can think that I could do would be to include lawn mowing in the rent but is that really an enticement?
Wendy
As it turns out, after finalising both NZ and OZ tax returns. 20.2K NZD this year for me, which are the accumulated losses, in AUD 16.2K. Worth claiming I say!!
Wendy
Oooo sorry Ozharp have just thought, forgot to say, DO NOT set up a NZ company to put your investments under. Did that and learnt the hard way. The losses are lost forever!!!
Wendy
Hey Ozharp
I answered pretty much this question in another forum a few weeks ago the following is guts of what I had to say. Hope it helps.
I own two investment properties in NZ one in Whangarei which I’ve owned since 2004 and one in Nelson which I’ve owned since 2007.
I know for sure that all of your losses are a tax deduction over here and are treated as though the property was in Australia. There has always been reciprocal tax laws between NZ and Australia but they have become even more beneficial to NZ investors and they changed in Australia, as at 1st July 2008, so that now all losses can be claimed against personal income as long as the property, therefore losses, is in your name. This includes everything from the interest on your loan, management fees, maintenance, depreciation ….. the lot!!
You need a good NZ accountant do your tax return over there which you give to your Australian accountant so they can then claim the losses against your income over here. I’m doing it myself right now. The losses can also be back dated as long as, as I said the property is in your name.
Although I’m an ex pat there are alot of Australian investors in NZ. The benefits include, no capital gains tax, no stamp duty on loans, generally lower interest rates, a much much better depreciation system, in my experience better rental returns, the bank (no matter what bank) will give you back $400 towards your legals and I haven’t tested it, so don’t quote me, but I don’t believe any mortgage insurance. But that last point is probably irrelevant anyway as not even an NZ’er living in Aust can get a loan with less than 20% deposit.
You will, if you make profit, have to pay tax on the income received. You can’t have the best of both worlds. Although in having said that, both of my properties are positive and the depreciation keeps them negative so I claim a loss. The only downside is that the GFC has tightened lending up over there, even as a NZ citizen (still), I haven’t found a bank who will take less than 30% deposit now. Aust citizens are the same.
And lastly to do what I’ve done I burrowed the deposit over here took it over there and then burrowed the rest over there. The interest on the Aust portion of the loan is claimed over here and the interest on the NZ portion on the loan is claimed on my NZ tax return.
Good luck,
WendyHi Vicky,
I’m a NZ’er who’s lived in Oz for 28 years but have two positive investment properties in NZ and would dearly love to buy again but for the life of me I can’t find a bank now that will give me a loan without 30% deposit, NZ’er and all!! I’ve had one property since 2004 and the other since 2007 so have some history, bank accounts, IRD number, tax returns, finance with two different banks, equity the lot!! I’m getting told if it’s an investment property they’ll only lend up to 70% and thats that. I even have an Australian Mortgage Broker who specialises in NZ lending.
What’s your secret and who are these banks.
Wendy
Great news Krish but don’t be too hard on your mate as I was only speaking to my NZ accountant last week and we were discussing a claim that I thought I was entitled too and basically his comment to me was that, ‘it didn’t matter anyway as the losses would only just sit NZ until I went back there to work to beable to make a claim agaisnt them.’ I very quickly set him straight and told him in no uncertain terms that I wanted to claim every dollar I was legally allowed to as I could claim the losses over here. You can’t have two bites at the cherry though so once claimed here then thats that. So my accountant wasn’t aware of the law change either.
It used to be that the losses did sit over there and here, until that is, you owned a investment property over here that made gains which is when your NZ losses would come into play and offset those gains. Which of course renders them useless if you don’t own positive investment properties over here. But as I said 1st July 2008 all that changed so that the losses are claimable now, regardless of the income they’re being claimed against.
Krish make sure that you do all of your years tax returns as I’ve got losses that have been accumulating and I’m now able to claim them all at once now for this first time this year (as in the 2008/09 financial year as I’m only just doing my tax for that financial year now, oops!!) So happy days.
Good luck
WendyHi Krish
I own two investment properties in NZ one in Whangarei which I’ve owned since 2004 and one in Nelson which I’ve owned since 2007. Although different to your situation, mine are positively geared now thanks to the drops in interest rates.
The Nelson property has held it’s own as far as capital gains are concerned and the Tasman area is actually going up in value but Northland, as in your situation, has been dropping for some time now unfortunately. I recently decided I’d like to buy again and use the equity in the Whangarei property to do so. Or was thinking of selling it and would of used the gains I thought I had to buy two other properties. I’ve just had it appraised and the gains aren’t as much as they were in 2007, due to the downturn the property has gone backwards by about 30K, so there is no benefit in me selling. All I can do now is sit on my hands and wait.
My advice is the same as Mike’s I’d try and hang on too. There is no point in selling to make a loss when things will eventually come right.
If it’s of any use to you I know for sure that all of your losses are a tax deduction over here and are treated as though the property was in Australia. There has always been reciprocal tax laws between NZ and Australia but they have become even more beneficial to NZ investors and they changed in Australia, as at 1st July 2008, so that now all losses can be claimed against personal income as long as the property, therefore losses, is in your name. This includes everything from the interest on your loan, management fees, maintenance, depreciation ….. the lot!!
It sounds like you need to get yourself a good NZ accountant do your tax return over there which you give to your Australian accountant so they can then claim the losses against your income over here. I’m doing it myself right now. The losses can also be back dated as long as, as I said the property is in your name.
I don’t know if this will help offset the out of pocket expenses enough but something else to think about, if you aren’t already doing it, make sure the loan is interest only at least until you get out of the rut.
Al least you have a gung ho agent which is more than i can say for my place up North!! Hang in there.
Wendy
