All Topics / Overseas Deals / Finance and Tax Issues for Buying NZ Property

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of DogbertoDogberto
    Join Date: 2007
    Post Count: 3

    Hi All,
    I live in Sydney and am thinking of buying an investment property in NZ.
    My first question is which country should I get the mortgage from : a NZ bank or a bank here in Australia.

    My second question is tax related. I guess if my property is positive cash flow then I'll have to pay tax to ATO. On the otherhand if it is negatively geared then would I be able to offset the losses against my income and get ATO to partially pay for it.
    Suppose I get the mortgage from a NZ bank, then would I still be able to offset any losses against my income or are tax benefits only available if I get mortage from a Australian bank.

    Thanks in advance

    Profile photo of Nigel KibelNigel Kibel
    Join Date: 2005
    Post Count: 1,425

    Speak to Andrew Clark at Clark Jacobs  [email protected]

    He is an accountant based in Sydney who does both Australia and New Zealand tax returns.

    In terms of where you borrow the money it needs to be in New Zealand because an Australian bank cannot take security of a foreign asset. It is not hard to get a loan however you are paying New Zealand interest rates which are high at present.

    Nigel Kibel | Property Know How
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    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213


    The ATO wants to assess you on  your worldwide income, so you probably can claim the loss against your Aussie income – but you will have to pay tax on the profits here too.

    For NZ properties, you actually can get loans here in Australia. There are not many lenders that do it, but one is Pioneer. I think the rates are lower here slightly, but then you have to factor in exchange rates etc.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide)

    Profile photo of woodymanwoodyman
    Join Date: 2004
    Post Count: 2

    yep, they are right, if you are buying in NZ then its best to get your finance in NZ . same with Kiwis buying in Australia need to finance in Australia.

    Profile photo of DogbertoDogberto
    Join Date: 2007
    Post Count: 3

    Hi Guys,
    Thanks for the information you have provided.
    I have been reading about tax issues on ATOs website. It says that any loses on foriegn investments can only be offset against foriegn income of similar kind. You are not able to offset it against aussie income. So if you only have say 1 investment property, then does this mean that your expenses can only be deducted against the rental income from that property.
    Lets say the property rentals is $12,000 pa. The total costs including interest, insurance, rates etxc is $15,000pa. So you are making a loss of $3,000. Does this law mean that the whole $3000 will come outof your pocket?


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

    Hi Dogberto – your research is good in that the ato want to tax on world wide income like terry has said but foriegn lossess will not be offset against your oz income. Like others have said the best thing to do re finance is get it locally ie nz or the country your are investing in generally speaking – you can get it in oz but i have not heard of many people doing it. It is common for say people in japan who have very low int rates – anz & westpac do it from memory. You would probably want to talk to a good accountant as there are issues when you come to sell as the ato will be just as interested in capital gains you make through your overseas investments as they will with your oz investments even though there is no capital gains tax in new zealand. It might sound a bit complicated but it's not really after you have done your first few. Have a great day!!

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
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    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of emmajane06emmajane06
    Join Date: 2007
    Post Count: 38

    Hi there,

    Just to confirm as I have an NZ IP that losses can only be offset against other nz income. So I was advised to set up trusts for each IP so they could offset loss against each other.
    Westpac in Nz have been very good to me, my loan consultant signs off on my Australian cheques to be deposited without the $28 international fee and they are good as you can withdraw from Westpac ATM's in Australia with out an international ATM withdrawal fee which is handy if you find a CF+ property so you need to withdraw money from here.
    PM me if you want the name of my consultant.


    Profile photo of how2how2
    Join Date: 2007
    Post Count: 5


    Get the experts. They are not hard to find

    My business partner Is Matthew Gilligan – Gilligan, Rowe and Associates – he is the man in NZ

Viewing 8 posts - 1 through 8 (of 8 total)

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