In our June 2020 webinar on tax planning for Australian expats, Matt Heron, General Manager of Global Operations at SMATS Group, offered four top tips on property investment for Australians living overseas.
Four top tips on property investment for Australian expats
- Use ‘negative gearing’ – expat style
If an Australian property asset costs you more than it earned in the tax year you can accumulate taxation credits to use against future income or to offset future capital gains after you return to Australia.
That is why SMATS Group encourage Australian expats not to reduce their debt on investment property while living abroad but to keep debt as high as possible in order to accumulate these valuable tax credits. Instead expats should focus on repaying other debts or investing into alternative vehicles overseas. Adopting this strategy over a five to 10 year stint overseas could mean having very little tax to pay in the year(s) following a return to Australia.
- Invest in an Australian home NOW
Don’t wait until you move back to Australia to acquire your future home but take advantage of the excellent opportunity many expat packages afford to maximise your borrowing potential. If you are lucky to have education, accommodation and transport benefits, these are taken into account when working out how much you can borrow, increasing your buying power. Get a deposit together and invest now but make sure you plan ahead to find the home that will suit you five to 10 years down the line when your family situation may be different and you may have a partner and children to accommodate.
- Location matters!
Whether you are looking for your future home or an investment property, go for the best location – and quality – that you can afford in the state or city where you intend to live. New properties offer more depreciation allowances than old.
- Know your boundaries
Don’t go in over your head and make sure that you can afford the property you are buying. Look at the purchase within the context of your overall financial plan and talk to professionals to ensure that you fully understand the lending and tax perspective of any purchase.
If and when the time comes to return home, you will need to review your property investments and how you approach your financial planning. If you plan to relocate to Australia in the next few years, you will find lots of useful information in this post.
Living and working in Asia often provides a golden opportunity for Australian expats to put in place a sound financial plan and build wealth for the future but in order to maximise the opportunities on offer it is crucial to seek professional advice! You can discuss any of the above points with your financial adviser who will put you in touch with the relevant contacts at SMATS Group for more specialist advice if it is required. If you don’t have a financial adviser, contact us for a free initial consultation.
Infinity would like to thank Matt Heron and Pau Lam for the information provided during this webinar. The SMATS Group are international leaders in providing Australian taxation, finance and property investment services to Australian expatriates, foreign investors and intended migrants. No other company offers the same range of services, accessibility, global expertise and experience. Please note that this information is of a general nature. Always seek professional advice relating to your individual circumstances before making major financial decisions.
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