Here are our 6 tips for buying a holiday home:

Want to talk about tax? Wealth creation? Planning for retirement? Contact us on 099730706 line 2 or email us.

Investing in property in New Zealand can be a good opportunity to generate rental income and potentially earn long-term capital appreciation.

​Here are some things to consider when investing in property in New Zealand:

1. Research the market: It's important to research the local property market to find out what types of properties are in demand and where they are located. You can also research the historical performance of the market to get an idea of how the value of properties has changed over time.
2. Consider the location: The location of the property is a key factor to consider when investing. Look for properties in areas that are likely to experience strong demand, such as those close to amenities and transport links.
3. Determine the type of property: There are different types of property you can invest in, such as houses, apartments, townhouses, and commercial properties. Consider the type of property that will best suit your investment goals and budget.
4. Calculate the costs: Investing in property involves upfront costs such as the purchase price, as well as ongoing costs such as mortgage payments, insurance, maintenance, and property management fees. Make sure you have a clear understanding of all the costs involved so you can budget appropriately.
5. Seek professional advice: It's a good idea to seek the advice of a financial advisor or property investment specialist before making any investment decisions. They can help you understand the risks and potential returns of investing in property and provide guidance on the best course of action for your specific circumstances.

Contact us on 0800890132 line 2, or via our contact form. We'll help you evaluate your situation and connect you with the right people.  

​Perhaps you’ve been thinking "I want to buy property," but you’re worried about your debt. Here are 5 debt pay-off strategies!  Before you start looking for a real estate agent, scheduling property tours, putting down offers, it’s time to get rid of your debt once and for all - or reduce it as much as possible. When you’re ready to invest in real estate, EpsomTax.com can help you along the way! In the meantime, these tips will help you tackle your debt burden.

As you browse local listings, you might be worried that the high asking prices will prevent you from breaking into the housing market. But if you think outside the box, you might be surprised by your options. For example, you could consider buying an apartment, purchasing a home with space for a “mother-in-law” suite that you can rent out, or buying a home “as-is.”
 
If you choose to buy a home “as is,” you’ll save money upfront, but you’ll also be responsible for fixing any problems after you move, like structural issues, eliminating mold and mildew, patching leaks, and getting rid of pests. A seller will not be responsible for fixing problems like this.

​If you’re a business owner, there are a few things you can do to increase your take-home pay and increase your home buying budget. For instance, by structuring your business as a Limited Liability Company (LLC), you can take advantage of additional tax breaks. With LLC status, you can also rest assured that your personal financial assets will be better protected if your business runs into economic trouble. Before you start gathering your paperwork for filing, check the rules in your area for forming an LLC.

 What if you’re juggling multiple loans or forms of debt? You might be wondering which debts you should pay off first, or you might stress out about missing payments. Consolidating your debts can help you avoid these pitfalls. If you’re interested in consolidating your debts, Nectar recommends calculating your average interest rates first, because you’ll want to ensure that your debt consolidation loan interest rate is either equal to or lower than this figure.

If you’re struggling to make all of your payments on time, you may want to call up your creditors and talk to them about setting up alternate payment plans. But you’ll also want to explore a few ways that you could increase your income. Picking up a side-hustle is a great way to pay off your debts on a faster timeline and make your payments more comfortably.
 
Which side hustle should you pursue? Unity recommends walking dogs, joining a ride-share app, doing odd jobs for your neighbors, or becoming a mystery shopper.

Overall, savvy budgeting is the key to paying down your debt. You need to make sure that at the end of the month, you have plenty of money left over after paying all of your necessary bills. If you know that you’ve been overspending, it’s time to start tracking every penny you spend. Try tracking your spending carefully for a month, and then sit down to go over everything you spent money on. Where can you cut back? Is there anything unnecessary that you were purchasing that you can eliminate from your budget completely?
 
Dealing with debt can be frustrating. But with the right approach to personal finance, you won’t be stuck with your debt forever. By saving carefully, looking for additional sources of income, and budgeting well, you can pay off your debts and buy your dream home!
 
Are you interested in real estate investing? Turn to EpsomTax.com to get started! Fill out the contact form on our website today to get in touch or call 099730706 line 2

The Australian Tax Office (ATO) wrote back!  Call me pessimistic, but I didn't think we'd get a reply.  Nonetheless, a few days ago it arrived.  Here's the two questions we asked, and the response of the ATO regarding personal attribution of losses from a Look Through Company (LTC):

Question #1
Seeing as a New Zealander working in Australia is taxed on his worldwide income, does the ATO allow losses from rental property in New Zealand owned by a New Zealand LTC to be offset against personal waged income earned in Australia?


Answer
"For Australian income tax purposes, companies are unable to distribute lossees from rental properties (or other losses) to their shareholders."

In other words, No.

Question #2
Seeing as a New Zealander working in Australia is taxed on his worldwide income, does the ATO allow losses from rental property in New Zealand personally owned by said individual to be offset against personal waged income earned in Australia?
​
Answer
"If an Australian resident's overseas property tax deductions are greater than their overseas rental income, they will have a foreign tax loss. They can use their foreign income loss to reduce their Australian income."

In other words, Yes.

So, what's in it for me then?
Well, dear reader, the point is this: If you have negatively-geared rental property in New Zealand, which is personally owned i.e., not by a company, then you can claim the losses against your tax in Australia. 

How it works is this:

1. File the relevant tax returns in New Zealand first, then
2. Do likewise in Australia.

BUT, there is a gotcha.  This means that 

1. You'll have to pay CGT to the Australian government when you sell the property, and
2. Any claims would be clawed back.

So, you need to consider the long-term scenario before doing so.  We recommend you talk to an accountant who is skilled in this area first.

What about...

• If you live or work in the UK?  See this article.
• If you live or work in Malaysia or Singapore?  If Singapore, click here. For Malaysia, see here.

In this blast from the past (2013), Daniel Carney of Goodlife Financial Advice brings you this insightful interview with Garreth Collard, Principal at EpsomTax.com 

The topic in question is whether an LTC is the right ownership structure for your Residential Investment Property. We pick Garreth's brain to get to the heart of whether an LTC is right for you. A 'must see' for any investment property owners!

Topics Discussed are:

• What is an LTC?
• Who would benefit from setting up an LTC?
• Partnership or LTC: which is better?
• How do you set up an LTC?
• How do you manage the LTC?

Money vs Your Emotions: What You Need to Know! Amazing insights from Lynda the Money Mentalist! 

Inland Revenue released a Tax Information Bulletin (TIB) in September 2019, which clarified this.

For the purposes of this blog post, we are going to assume that the LTC or an individual only holds residential rental property i.e. no commercial, they are not a trader or an associated person or a developer etc, they don't have an Airbnb-style short-stay accommodation house in the picture.

Can losses from an LTC with residential rental property be offset against income from rentals owned by a partnership or in your personal name?
It depends on whether

1. the LTC decides to apply the ring-fencing rules on a portfolio basis or on a property-by-property basis.
2. the shareholders have any other residential rentals with income/loss to offset against this

However, the answer is essentially, "Yes", if:

1. you have decided to use a portfolio basis for the LTC (that is spread the losses and profits out between the various properties owned by the LTC) 
2. you have at least one residential rental property held in your own name or in a standard partnership i.e. we are not commenting on "limited partnerships" here

So the result is, you can have a negatively-geared LTC, and given the above points, the losses can flow through to you as a shareholder. You can then offset this against profits from a personally-owned rental (either solely owned or in a partnership). The situation also works in reverse ie there are profits in the LTC and losses in the personal/partnership rental.

Note that you can't offset any losses against income from other sources e.g. wages, like you used to in the good old days. That is what the concept of "ring-fencing of losses" means. The losses are "ring-fenced" so that they only apply to residential rental property.

Some interesting points

• If an LTC applies the rules on a property-by-property basis, the shareholders have to also take that approach in their returns. If it applies the rules on a portfolio basis, ditto.
• This is not the case for partners in partnerships. If a partnership has filed a partnership return applying the rules on a particular basis, the partners do not necessarily need to apply the rules on that same basis. So a partnership now gives much more flexibility than the LTC in this one respect.

​
Do restructure strategies such as selling your old family home to an LTC still work?
We have previously recommended this, in blog posts such as this one.  The answer is now a big "no." Why? Changing ownership structures will now not shift/change non-deductible debt into deductible debt in any residential investment property scenario, including short-stay accommodation. For more info, see this blog article

For more info, the IRD Sept 2019 TIB is below

As always, situations vary, so please contact us for advice on your specific situation. Call 099730706 or email us here