Overseas Property buying by Australian Property Investors

Boosted by a strong Australian Dollar (AUD) and rock bottom or falling property prices overseas, smart Australian property investors are now looking overseas to snap some good bargains and great rental yields. With property prices down between 30 – 70 percent in large parts of USA and property prices still down approx 10 – 20 percent in UK, Aussie investors are looking overseas to get a great bargain. I recently heard from an experienced Aussie property investor who snapped up 3 properties (houses) in US for less than $220,000. To make it even better the rental yields on the properties is between 16- 23%. Before you sell your own home and start buying properties overseas the important things to consider are:

Finance solutions for overseas property purchase

The opportunity to purchase property more cheaply overseas has stirred astute property investors in Australia to opportunities overseas in good locations. Choosing the right financial institution to finance your overseas property purchase could ultimately save you money and time. Some of the major banks and lenders for instance have overseas branches and partners so you can borrow against an overseas property and organise transactions and paperwork with ease. However, some banks and lenders will not accept an overseas property as security.

To find out which of Australia’s major banks and lenders offers a competitive finance solution that is right for your overseas property purchase, get your RBA Money mortgage broker to help. They can even help complete your application and negotiate a more personalised finance structure. Simply complete the brief form on this page or call +61 2 9144 4470 and we will contact you at a time that is convenient for you.

Purchasing overseas property with Australian Currency

If you are arranging finance to purchase a property overseas then you will have to take into account the exchange rate on currency transfers. Exchange rate fluctuations may result in gains and losses of around 10 per cent which will in turn impact on your purchase costs and the profit you would make on the sale of the property. Buying when the exchange rate is favourable would more than likely place you in a better position for any future sales of the property. For more on transferring Australian currency to purchase an overseas property speak with one of our RBA property consultants.

Laws and taxation for overseas properties

Experts warn that property investors who do venture offshore need to be aware of the markets they are getting into, as every country has its own laws governing the buying and selling of properties, the obligations of landlords, different tax regimes etc. Also, consumers who buy property overseas may have no protection under Australian law if something goes wrong

The laws governing the sale and purchase of property particularly to foreign nationals will vary in every country. And if you are purchasing an investment property, you will need to ensure that you understand your legal obligations as a landlord.

Furthermore, if you intend to rent out your overseas property for any length of time, you must declare this income not only to the Australian Taxation Office (ATO) but possibly in the country in which the property is located.

According to the ATO, income from investments in overseas property is generally foreign source income. If your property is located outside Australia, special rules apply to the deductibility of your rental property expenses (for more information see the ATO website). Australian residents are generally taxed on any capital gains made on overseas property and must declare the gain on their income tax return.

There are also an array of taxation issues that need to be dealt with as far as the Australian Taxation Office (ATO) and the taxation office in the country where you intend to make the purchase. To ensure that you have got all your bases covered, get your RBA Money Mortgage Loan Broker to refer the right professionals to assist you in your purchase.

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