Buying in Australia

smiles80

I’m an Aussie expat and am looking  into possibly buying a holiday flat in Australia. I live and work full time in the UK, pay all my taxes here etc. I believe I could get an expat mortgage but I’m wondering what else I need to consider? I would need to rent it out while I’m not using it (so most of the time) to help cover the mortgage repayments so would need a company to manage this for me. I don’t expect to earn profit but it would be great to get on the ladder and have somewhere for retirement. I assume I’ll need to pay tax in Australia, would I also pay in the UK? What else I should consider? Thanks

seradane

The forumites here are unlikely to have much knowledge of how Aussie and UK rules overlap, so you'd be better off speaking to a financial advisor who specialises in how the two countries rules mesh together.

I do know though that Australia and UK have a reciprocal tax agreement, so you won't be double-taxed. If you haven't owned property before and intend to buy in the UK at some point, buying in Australia will lose you your UK first time buyer stamp duty status.

If relevant, it may also be worth looking into inheritance tax rules between the two countries. If you're classed as UK domiciled (have lived here for 20+ years) your estate is subject to UK rules which are much worse, and there are some situations that between Aus and UK your estate can be charged 80-90% tax, so naturally best to avoid that if you can.

smiles80

That’s helpful, thank you. Good point about the inheritance tax as I do have property here too. I’ll speak to a financial advisor, thanks.

user1977

I expect things will vary a fair bit between each state/territory too, so make sure you're looking at relevant info for wherever you plan to buy.

AnotherJoe

Better to find an ex pat forum.

Though why not just be "on the ladder" in the UK and then when you retire sell your UK place and buy in Oz then?

Would seem to be far simpler on multiple fronts.

xylophone

https://www.savings.com.au/home-loans/can-foreigners-buy-investment-property-in-australia#:~:text=Foreigners can buy an investment,of housing they can purchase.&text=Buying a home to live,are a temporary Australian resident.

Foreigners, or non-residents, must apply to the FIRB for approval to buy their desired investment property.
You are still an Australian citizen presumably but it seems that you are and will be non resident for the foreseeable future.

The above may apply? And you won't be permitted to enter Australia for some while ahead?

smiles80

Thanks xylophone, I’ll check that link out. Yes still a citizen but not a resident for the foreseeable.

Scotbot

xylophone said:

https://www.savings.com.au/home-loans/can-foreigners-buy-investment-property-in-australia#:~:text=Foreigners can buy an investment,of housing they can purchase.&text=Buying a home to live,are a temporary Australian resident.

Foreigners, or non-residents, must apply to the FIRB for approval to buy their desired investment property.
You are still an Australian citizen presumably but it seems that you are and will be non resident for the foreseeable future.

The above may apply? And you won't be permitted to enter Australia for some while ahead?

I have dual citizenship so can answer some of your questions. FIRB does not apply to Australian citizens, non resident in this context refers to residency status not location. 

Tax wise  you are resident in the UK so don't have to do an Australian tax return and I am fairly certain (but not 100%) this still applies for rental income but it will be foreign income as far as HMRC are concerned. There is a tax board on the forum which may be of more help. Pomsinoz is an expat forum which has people who can confirm the Aussie tax situation. It is certainly correct that you don't pay double taxes due to the reciprocal agreement.  May be worth paying a tax sdviser eho has knowledge of both markets.

If you buy property in Aus and then buy a UK property it will be a second property so increase UK SDLT and buying costs substantially. 

Depends where you are looking to buy in Aus but not sure now is a great time. The markets there have soared thanks to lower interest rates. The dollar is also high vs. the pound thanks to better management of covid and now high commodity prices. Long term average is 48p to the dollar, currently 54.8. If interest rates rise I expect prices in Aus to fall, particularly the Sydney and Melbourne markets which are well into bubble territory IMO. That combined with a potential fall in the dollar may make it worth waiting. Speculation of course but worth thinking about.

smiles80

Thank you Scotbot, all very helpful and good to know FIRB isn’t an issue. I’ll check out pomsinoz. I have property in the UK so the Australian one would be my second. Looking at the Sunshine Coast. 

Scotbot

smiles80 said:

Thank you Scotbot, all very helpful and good to know FIRB isn’t an issue. I’ll check out pomsinoz. I have property in the UK so the Australian one would be my second. Looking at the Sunshine Coast. 

Noosa would be an awesome place to retire, certainly beats Bournemouth !