It is important you know your tax obligations in Australia! As an Australian resident you are taxed on your Worldwide income, that includes income from any investment property overseas.

In recent years, the Australian Tax Office (ATO) has increased its crack down on tax residents that fail to declare income from property overseas. It states that you must include the rental income or property asset sale on your Australian tax return, and it must be converted into Australian dollars.

What happens if I sell the overseas property?

You may have to pay Capital Gains Tax when you sell the asset. This is the difference between what it cost you to acquire the asset and what you receive when you dispose of it. This could be either a gain or a loss. The ATO states that if you acquired an overseas property before you became an Australian resident, you are taken to have acquired the asset at the time you became a resident. If you are a temporary resident (normally someone on a temporary migration visa) you are not subject to tax on sales of any overseas property.

It is important to keep a record of the value of the asset at this time, so capital gains or loss can be accurately calculated. As this is a complex area of taxation law, it is important you speak to us for advice. There are exemptions depending on your circumstances.

Can I offset any losses against my Australian income?

For your property located overseas, the ATO has special rules that apply to the deductibility of rental property expenses that may or may not be claimed against your foreign rental income. It is important that you speak to us, to find out how this applies to you.

UK overseas property

UK overseas property example

I complete an overseas tax return for the property, do I still need to declare it?

Yes, however, if you have already paid a foreign tax on that income or gain, you may be eligible for a foreign income tax offset. This stops double taxation. Again, international tax rules can be challenging, so you must always consult your Taxpro accountant for advice so your personal financial situation can be reviewed.

To discuss your overseas assets with one of our experts, please contact us to book an appointment. Call Chloe on 08 9240 7629 or email: admin@taxproaustralia.com.au