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Hi. I am contemplating living overseas for 2 years. I fully own my PPOR (worth $500K, will rent for $400/week). ‘What are the tax ijmplications? I have heard that after 12 months my rental income will be taxed at 66% because I live overseas.
Can anyone advise whether this is trus?
No it's 30c in every dollar.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
There are several aspects.
If you rent out your home you will generally lose the CGT free status of it. However, there is a temporary absence exemption where it may be possible to keep it CGT free for up to 6 years.
Then there is the income tax aspects. You will be making a profit from the rent if you have no interest to claim. This means the net income after expenses will be added to your taxable income for the year. If you earn more than $16,000 or so pa then you will have to pay tax.
There is also the residency issue. Will you remain a residence for tax purposes? If not then you will be taxed at a higher rate. 29% with no tax free threshold. If still a resident then you may also be taxed on your overseas income. You may have to look into any double tax agreements with the country you are in.
You also have to consider the tax laws of the country in which you reside. Your Australian income may be taxable there too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
