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"What taxes will I need to pay in Australia on my property?"

This is a question we get asked a lot and for expats, when it comes to buying, holding and selling a property in a personal name in Australia the taxes can be confusing. In this blog, we take a look at the tax implications for an Australian citizen residing overseas as a non-resident for tax purposes.

Buying:

• The same taxes are applied here as they would be an Australian resident living in Australia. These are state dependent taxes that include stamp, mortgage and purchase duties. 

Holding:

• For any rental income received (Australian sourced income*), the applicable taxes will apply:
  • 32.5% from the 1st dollar received up to $80,000 (there is no tax-free threshold) 
  • 37% from $80,001
  • 47% from $180,001
• If your holding expenses outweigh your rental income, then no tax is paid on the rental income
• It’s important to remember that depreciation and improvements to the property may help offset the total tax paid. 

Selling:

• If an Australian resident for tax purposes holds the property for more than 12 months, they are entitled to a 50% Capital Gains Tax discount when they sell the property. 
• Australian non-residents for tax purposes lose the 50% Capital Gains Tax discount for any capital gain made during the period they are a non-resident.
• For any purchase made after 8 May 2012, Capital Gains Tax vendors have to apportion their capital gain based on the period they were a non-tax and tax resident. 
• The Australian government also provides non-residents for tax purposes a Capital Gains Tax holiday. This holiday allows you to receive rental income for your principal place of residence for up to six years after you have left the country. If the property is sold within six years no Capital Gains Tax is payable
• People renting out all or part of their homes on sharing apps like Airbnb and Stayz are also liable to pay Capital Gains Tax when they eventually sell the home or unit. The Australian Taxation Office is using data matching technology to match over 650 million pieces of data a year from a range of third-party sources to monitor income. The Capital Gains Tax will be calculated on the portion of the floor area that is income producing.

Milk Chocolate purchase residential and commercial property in Australia on behalf of Australians living abroad, looking for a home or investment property. To see how we can help you get in touch here. 

Thanks, Michael 

*Your rental income is added to any other Australian sourced income to generate your total income.

Source: 

Australian Taxation Office/Domain.com.au

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