Hi all,
I am a New Zealander living and working in Australia and I intend to do so for the forseeable future. Soon I will have enough saved for a deposit on my first investment property. The thing is I intend to buy something back home. I think I will be ok crunching the numbers myself, my concern is that there may be hidden pitfalls involved in investing in a country I am not currently residing in. Anyone out there been there done that?
Use the search function and have a look through the old posts. Beware, there is PLENTY of information on Investing and Financing in NZ. There are also several members of the forum whom actively invest there.
Cheers,
Battz
Hi there, check old postings. I believe Westan is the man to help you. He lives and owns many properties in NZ and may be able to assist you.
Cheers
Kia ora
Middle Earth
No pitfalls go for it, allm your trips back will be tax deductable
Steve
Hello All,
This is probably as good a thread to raise this matter on as any – and there have been a few similar threads! Most such discussions are filled with positive views about Aussies investing in NZ.
My interest in doing this was killed by a NZ accountant who pointed out to me that I would not be able to offset taxation losses on any NZ IP against my Australian income. He quoted and forwarded a copy of ATO interpretive decision ID2002/177. This decision is quite black and white about this matter.
To me this says that unless you have separate income in NZ against which to offset your losses, a NZ IP is not viable. I suspect this even includes those +ve CF ones in the back of Bourke (wherever that is in NZ!)
My question to all those Aussies who DO have a NZ IP is “How do you get around this matter?” Surely you all haven’t bought them without a loan?
Raymondo
Hi all
marissa is right i bought 15 properties in NZ while i was living in Oz, i now live in NZ and it is good to bring up the pitfalls fnash.
1. don’t pay too much, i see aussies arrive in towns we are buying and often they pick up deals we were trying to buy. A good example of this was a few weeks ago an aussie boughta a house that there were 5 offers on it and she paid 65k which was 6 above asking price and 9k more than she shoulds have paid.
2. check when buying properties that the heater usually a wood burner is approved, if not it may not be covered by insurance if the property burns down.
3. be careful of gangs, this is more prominent in the north island, gangs like mungrel mob and black power aren’t the most popular neighbours !
4 always get a building report if buying over the net.
5. don’t be put off by the estimates on builders reports. i’m using one for myself and our clients at the moment and his estimates are ridiculous 8,000 for and outside paint, a better quote of 3,200 is more like it.
6. watch out for smoothe talking agents, most agents in NZ are very honest infact they go overboard and reveal the problems with a property, sadly some will take advantage of you nievity to the local market.
7. be aware that NOW CAP GAINS in NZ is for NZ tax payers, aussie tax payers will still need to delcare tax made overseas. (i’m not an accountant)
8. If you can make the trip to NZ, it may cost you a few dollars but it will be worth it. I have a number of buyers who have traveled, seen the markets we are recommending and are even more comfortable to be buyers.
9. be aware that the buying process takes longer when you are in OZ allow 6-8 weeks for settlement.
thats enough comments from me.
Mini and Muppet, wilandel, rodc and others that have revealed on the forum that they are buying in NZ may also like to make some comments.regards westan
I find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
I agree with Westan on the agents honesty.
After viewing several properties with one agent, on the south island, he totally turned me off buying those run down hovels that people are flocking to buy. Yields might be 12-15%, but you would be nuts to buy em.Check out http://www.propertytalk.co.nz as well.
James
hi all
sorry romando, i didn’t see your comment before i sent mine (sometimes i start writing and then get interupted and 15 minutes later finish it)
anyway with the tax loss situation that may be right, so my advice would be buy in NZ cash positive properties only. While there are top capital growth opportunities make sure they are also cash positive. if the deals are negative geared why not stick with OZ perhaps QLD somewhere.
regards westanI find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
Hi fnash
Welcome to the forum.
Check out this site on http://www.propertytalkco.nz
http://www.propertytalk.co.nz/modules.php?name=Forums&file=viewtopic&t=241There are 76 web sites listed, some of which should help you in your research
Regards
Hi all,
Westan has covered just about all the points. The one I’d really like to support is that if possible make a trip to NZ to check out the areas for yourself. They can be very different when you’re “on the ground” to how they appear over the net. Many of the towns have have areas where you probably don’t want to invest, but you’d never know without checking it out for yourself. Once you have a feel for the locations, you may then be able to make subsequent purchases sight unseen (subject to all the usual clauses of course).
Raymondo, Westan’s right, the way to get around the issue of offsetting NZ losses against Australian income is to avoid having NZ losses by only by +ve properties.
regards,
Rod.
Westan and Rod,
You both suggest +ve CF props as the solution to the concern I raised about not being able to claim the losses on a NZ IP against my Aust income. But isn’t that exactly what you have to do to make an IP CF +ve??
I understand a +ve CF prop to be one in which the income exceeds the costs. That income is made up of the rent PLUS the tax return , based on the “book” loss you made and your taxation level.If you’re not allowed to claim the losses, you never get the tax return that makes the deal cashflow positive.
Am I missing something here??
Raymondo
Hi Raymondo
I think you’ll find that it can be +ve even disregarding the “book losses”.Maybe someone can clarify that for us?
Regards
JudiHi Raymondo,
judi is correct. If the rental yield is high enough then the rent will cover all outgoings (mortgage, insurance, rates etc) and still leave you some left over. What you seem to be talking about is the -ve geared, +ve cashflow model (as promoted by Margaret Lomas). What we are aiming for is +ve geared, +ve cashflow where you don’t need a your tax return to make it +ve.
These properties are currently easier to find in NZ than OZ (though they still are available here), but as mentioned earlier in the thread you need to do your homework.
regards,
Rod.
Originally posted by raymondo:My interest in doing this was killed by a NZ accountant who pointed out to me that I would not be able to offset taxation losses on any NZ IP against my Australian income. He quoted and forwarded a copy of ATO interpretive decision ID2002/177. This decision is quite black and white about this matter.
Raymondo, how long ago did you get the advice? – check out ATO’s ID2002/764. The world was flat and now it is round.
cheers
Tony
Originally posted by tonyy21692:Originally posted by raymondo:My interest in doing this was killed by a NZ accountant who pointed out to me that I would not be able to offset taxation losses on any NZ IP against my Australian income. He quoted and forwarded a copy of ATO interpretive decision ID2002/177. This decision is quite black and white about this matter.
Raymondo, how long ago did you get the advice? – check out ATO’s ID2002/764. The world was flat and now it is round.
cheers
Tony
Tony, I think raymondo is right you can offset your one overseas income losses to other overseas income but not with Australian income.
If you know more about it please tell us.
Cheers
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PropertyGuRu
[] Hi PropertyGuru
I just went to ATO web site then the legal database and searched for ID 2002/177. id2002/764 pops up as well. Suggest reading both. Thin capitalisation rules (ie the top end of town off shore tax planning stuff) was inadvertantly affecting mum & dad investors so the legislation was changed and from memory I think its capped at around $200K of interest.
Regards
Tony
fnash, I don’t know how long you’ve been in oz, but as a Kiwi, the first thing you need to do before buying back home is to ensure your tax status with inland revenue is “non-resident” (presuming you have no NZ income still coming in), otherwise I understand they could potentially count your aus income when assessing what tax you have to pay on your IP, but I’m happy to be corrected on this count. Go to http://www.ird.govt.nz, download the form and send it off to confirm your status. Your status doesn’t necessarily change just because you’ve been overseas for years – you have to ask.
This may be helpful to Ozzie residents wanting to purchase over in NZ. My partner and I have recently been trying to purchase over in NZ, what we found out through a broker was that we had to have $50,000 in cash,or I think a 20% deposit, whichever was the higher. So if you are trying to buy multiple properties,$50,000 in one deal is not leverging your money. The area we were interested in, the population was under 10,000, which may be the reason for such conditions. So we are now using a debt partner, living & working in NZ, & doing a Joint Venture to secure our interest in the property.
Any feedback would be great.
Regards,
Sharon.Sharon
I know that this is what some lenders are asking but I suggest that you do further research on finance as it is easy to get a 20% deposit deal as an off shore investor. Try a new broker. PM me if you want to know who I have just used.
Tamara
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