All Topics / Legal & Accounting / Depreciation of overseas property

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of Billy WhizzBilly Whizz
    Participant
    @billy-whizz
    Join Date: 2004
    Post Count: 3

    I have an apartment in London which is cash flow positive. The profit is my only source of income in the UK and as such is below the UK tax threshold so I don’t pay any UK tax.

    Does anyone know if I can apply Australian depreciation allowances to minimise my Australian tax liabilities. If so, how would I obtain a depreciation schedule given that I couldn’t get an Australian quantity surveyor to inspect the property.

    Regards,
    Billy

    Profile photo of Don NicolussiDon Nicolussi
    Participant
    @don
    Join Date: 2005
    Post Count: 1,086

    i will take a guess for you billy – ozzie gov’t wants you to pay tax on your worldwide income – so if you are a resident for tax purposes in oz the ato is interested in all your activities. Where are you are resident for tax purposes? (speak to a good tax lawyer)

    Then i continue guessing — so if you do your income tax return in the uk and given all the local rules and deductions available to you the number is still a plus number the ato wants some. Although it has been a very long time since i have seen an on paper plus number for a property tax return given the significant depreciation allowance available in most places.

    But i am pretty sure they are not interested in offsetting foreign losses against local income.[blush2]

    Sourcing Positive Cashflow Investment Property http://www.cashflowproperties.co.nz/properties-5.html

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I am guessing too, but would think that the ATo would allow depreciation on overseas property as this is an asset used in producing income on which you are being assessed. maybe you would need to use the UK equiv of a quantity surveyor.

    Maybe contact the ATO and ask over the phone – ring 3 times as you will get different answers.

    Terryw
    Discover Home Loans
    Parramatta
    [email protected]
    Sign up to my mailing list.
    Just send me a blank email, with “subscribe” in subject line.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of depreciatordepreciator
    Member
    @depreciator
    Join Date: 2003
    Post Count: 541

    Billy, you’d have to use the UK depreciation rules because that’s where the property is. Should be loads of companies over there doing it.
    Scott

    Tax Depreciation Schedules
    Australia wide service
    1300 660033
    [email protected]
    http://www.depreciator.com.au

    Profile photo of washingtonbrownwashingtonbrown
    Participant
    @washingtonbrown
    Join Date: 2006
    Post Count: 44

    Billy

    I think you’ll find residential depreciation laws are not the same in the UK.

    IE you can only depreciate Commercial properties.

    Napier Blakely Winter (Who are linked to Napier Blakeley) will be able to assist you.

    When googling in the UK -try “Chartered Surveyors” not Quantity Surveyors…you may have more luck that way.

    Or try the http://www.rics.org

    Regards

    Tyron Hyde
    www,washingtonbrown.com.au

    Profile photo of Chief WigamChief Wigam
    Participant
    @chief-wigam
    Join Date: 2004
    Post Count: 60

    Hi, I have the same question but for property in Asia, eg Singapore.

    How do I find a quantity surveyor there?

    Are there on-line depreciation schedules that can be done by the owner rather than having to send a quantity surveyor out to the property?

    I have heard a quantity surveyor could be flown out from Australia to do the schedule.

    Any advice or experience would be appreciated.

    Profile photo of Mr5o1Mr5o1
    Participant
    @mr5o1
    Join Date: 2010
    Post Count: 107

    Hi Billy,

    You need to determine your UK income according to UK tax law. So depreciation would have to be calculated according to UK tax law. Unfortunately you can not apply Australian Tax Law (or concepts thereof) in determining your foreign source income, the amount needs to be determined according to the relevant local laws in the country of origin, and then the total amount of FSI is included in your tax return and subject to australian tax law.

    Having just had a quick look at it I think your out of luck. Looks like you can claim ‘capital allowances’ for repairs and renovations, but I can not find any mention of claiming any part of the purchase price. there’s also a wear and tear allowance for furnished properties.

    Profile photo of RobRob
    Participant
    @robkay01
    Join Date: 2015
    Post Count: 1

    Any update on this? From my reading I don’t think this final answer is correct and that indeed you can claim depreciation of building construction costs for overseas property. I’m looking into this currently for my 2 properties in the UK, however the only surveyor I have found who offer a tax depreciation schedule to Australian rules for overseas property is Washington Brown. They seem through, however are expensive at around $2000 per property depreciation schedule, which is a lot more than I wanted to pay!
    Anyone have any information or sources?

    Profile photo of luvaulluvaul
    Participant
    @luvaul
    Join Date: 2011
    Post Count: 2

    I looked high and low for either a US-based or an Australian-based firm that could produce ATO-compatible depreciation reports for my Texas properties. Washington Brown (Australian firm) was the only one I found. But I only used their reports for my ATO filings, not for my IRS filings in the US. For that I generated a depreciation schedule myself using an online MACRS depreciation calculator. Different country, different rules for calculating depreciation.

    Rob: I did find one other Australian-based firm that produces ATO-compatible depreciation reports, and for UK-based properties no less. But I don’t remember the name! I’ll try to find it again and, if I do, I’ll post it here.

    • This reply was modified 5 years, 3 months ago by Profile photo of luvaul luvaul. Reason: at symbol linked to wrong member, so removed it
    Profile photo of luvaulluvaul
    Participant
    @luvaul
    Join Date: 2011
    Post Count: 2

    Rob: the name of the other company was Ryan & Associates (in Perth), website: http://www.ryanest.com. They have a form you can fill in at http://www.ryanest.com/#!tax-depreciation-schedules/c1rkj (click the “UK Property” button). I spoke to one of their associates who said they don’t have people on the ground (yet) in the UK to perform an inspection (which would be required if your e-documentation isn’t sufficient).

    Cheers,
    Lance

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.