Australian Expatriate Tax Benefits
Australian investment property is a popular investment choice for expatriates furthermore; it is also the best tax planning tool while living overseas and is a great way to make you have forced savings.
It is important that you should borrow at reasonably high levels, say 70-80% finance, to maximise the tax advantages available.
Normally the interest cost should be enough to have the property make an annual taxable loss and the expenses of ownership and interest are higher than the annual rental. This loss is commonly known as “negative gearing”.
While you are overseas this loss has nothing to offset against, except other property income or property capital gains, and accrues each year. Eventually upon your return to Australia, this built up loss will be able to offset your salary, investment income or retirement income providing you with a significant buffer against taxation for many years. This is further enhanced by the tax benefits afforded to new and near new property for depreciation on fittings and a special allowance to deduct construction costs.
The long term taxation benefits associated with Australian property should not be underestimated and should be integral in every expatriates financial planning while living abroad. Please talk to your Accountant or Tax Advisor for further clarification and information.