Looking across The Ditch for new opportunities
The economy continues to exceed expectations as it recovers from the COVID-19 period. One area that perfectly illustrates this is the property market. The rapid recovery has been such that the Government recently implemented policy to rein in growth, with measures targeted at investors.
While this makes it more difficult for New Zealand residents to benefit financially from investment properties, it does potentially open the door for Aussie investors (living and taxed in Australia) – a shift in focus that could generate new business opportunities for you.
With Australia's residential housing prices skyrocketing, investing in New Zealand may present as a more cost-effective way for Aussies to build a property portfolio. Plus, Aussies may benefit from more favourable Australian tax laws on income generated from foreign investments.
For instance, according to the Australian Tax Office, the tax paid on rental income in New Zealand could be tax-deductible in Australia. Also, any rental expenses incurred in New Zealand may also be tax-deductible in Australia. Furthermore, Australians may not be required to pay stamp duty on foreign properties – a costly tax that many have to pay on Australian properties.
Resimac's non-regulated Special Investment Loan of up to 20 years interest only at 50% LVR, with rates beginning 3.95%p.a. could be an ideal product for Australians looking to invest locally.
Although early days, this presents an emerging opportunity that mortgage brokers and advisers should be aware of. Keep an eye out for Australian investors looking at the New Zealand market and liaise with your referral partners, particularly accountants, to ensure you're across the key tax implications for Aussie investors so you can position yourself as the local expert.
This article does not constitute financial advice. Please consult with an accounting professional on all matters related to New Zealand and international tax law. All advertised interest rates are available for new eligible loans and are subject to change. Your interest rate may differ depending on borrower category, security use and how much you borrow relative to the value of your property. Terms and conditions apply to all loan features. Final approval is subject to credit assessment. Valuation fee is at the cost of the valuation. Annual fee $0. Settlement fee $475. Discharge fee $495. Details about our products and our full interest rate disclosure for new and existing loans is set out in our Interest Rates Disclosure document. A schedule of our fees and charges is available on the Costs of Borrowing, Forms, and Terms page.