We contacted the Inland Revenue Board of Malaysia (IRBM) with this scenario and these questions:
"Let's say I live and work in Malaysia, but I own a rental property in New Zealand. A tax return will be filed for this property with the Inland Revenue Department of New Zealand. My questions are:
Here is their reply, word for word:
So, much like the UK (but unlike Australia), your rental losses here in New Zealand can't be offset against income earned in Malaysia. However, any tax paid here on profits from rental property will be recognised by the IRBM.
Remember, even though you live and work in Malaysia, you'll still have filing responsibilities here in New Zealand, namely a non-resident personal tax return/s for the owners and an IR3R rental tax return.
Please call us on 0800 890 132 or email us.
Please see the following entries for tax treatment of rental property in NZ by Australia, Singapore , Thailand and the UK.
NB: Information provided on this website is not intended to provide an exhaustive or comprehensive statement of tax law and should not be used as a substitute for considered written advice. All information published is subject to our standard terms and conditions and disclaimer
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Let's say that you live and work in Singapore. You own a rental property here in New Zealand. How do you handle this from a tax perspective here in New Zealand, and in Singapore? Does it make a difference if the property is negatively or positively geared?
As a rental property owner, you will have to file tax returns here in New Zealand, regardless of whether you are tax resident or not. If the property is owned in your own personal name (or with your partner), then the profits or losses are split 50/50. If you have New Zealand income apart from this which has been taxed, e.g., wages, interest, then any losses can be offset against this tax paid. Profits, less deductible expenses, are paid for at personal tax rates. Accounting is a 100% deductible expense! If there is no other income against which a loss can be offset, then the loss stays here in New Zealand, being carried forward from year to year, until such time as there is a profit against which you can offset it.
If your rental property is owned by a Look Through Company (LTC), then the situation is similar.
We contacted the IRAS regarding Singapore's treatment of losses or gains from rental property in New Zealand; here's what they said:
"All foreign-sourced income received by resident individual in Singapore (excluding foreign-sourced income received in Singapore through partnerships in Singapore) on or after 1 Jan 2004 is tax exempt in Singapore.
(1) Given the above, since the rental income from New Zealand is not subject to tax in Singapore, any losses from such nature cannot be offset against any of the resident individual's income in Singapore.
(2) As mentioned above, since the rental income from New Zealand is not subject to tax in Singapore, any tax paid in New Zealand is not taken into account here in Singapore."
See here for more information.
In other words, Singapore isn't interested in what you are making or losing here in New Zealand, unlike the New Zealand government, which taxes it's residents on all worldwide income.
Questions? Give us a call on 0800 890 132 or email us.
For the UK, see this article.
For Australia, check out this blog.
For Malaysia, see here.
Thailand? See this blog entry.
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So, here's the situation: you have a rental property here in NZ, and it is making a loss i.e. it is negatively-geared. You're living and working in the UK. The question is: can you offset these losses against your income earned in the UK? (Or put more formally: "Does HM Revenue & Customs (HMR&C) allow losses from rental property in New Zealand to be offset against personal waged income earned in the UK?"
Sadly, the answer is "No." We wrote to HMR&C recently and here's what they said: "In the UK the income from property is classed as a businesses and cannot be relieved against general income except in the case of exceptional expenses associated with capital allowances." The HMR&C Property Rental Toolkit also says "Any rental business loss is automatically carried forward and set off against rental business profits of the following year. Rental business losses cannot be set against general income except in limited circumstances. From April 2011 furnished holiday letting losses can only be carried forward and set off against furnished holiday lettings profits of the same business."
So, what now then?
So, what happens to them? In the situation mentioned above, you have to file annual tax returns in NZ. Assuming you've made no taxable income in NZ, the losses then just get carried forward until such time as you've got something to claim them against here in NZ. Or in Australia. Do you have to show these losses on your UK tax return? Probably, but that's a question for your accountant in the UK.
Does it make a difference if you're tax-resident or not? No. You still will have a tax return filing obligation here in NZ, and the losses can't be offset against your UK income. They can only be carried forward.
Read HMR&C's Property Rental Toolkit here (PDF). See also this page at the IRD website which covers what to do if you have rental property in a country other than New Zealand, and this page which details the Double Taxation Agreements between NZ and the UK.
Confused? Call us on 0800 890 132 or contact us.
If you're working in Oz, it's a bit different. See this article for more info.
See this article.
See this blog.
Please see this link.
Image courtesy of basketman at FreeDigitalPhotos.net
Where is the next Onehunga? Where will the next Ponsonby be? Ah, that's the big question. Happily, there's a web resource to help you.
It's a great website, packed with information and has a cool name: hometopia.co.nz Want to find the right school zone? The right distance from the CBD? The right price range? There's a groovy tool on the site called "Suburb Sleuth" which lets you do all that and more.
There's also a bunch of free (and useful) information at "Streetwise Home Buying," including some great pages such as Leaky Buildings, To Build or Not to Build?, and LIM Reports.
Plus, it has a whole heap of handy calculators so you can work out life's most vexing questions, such as:
and so on.
There's a lot more there, but we won't go on about it. Check it out for yourself.
(Now, just in case you're wondering: What do you guys get out of this? The answer is: Nothing. We just happen to think it's a great home-grown resource that you should know about!)
Accounting for your rental residential investment property; specialised property tax advice. Buy me a coffee!