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.
Image courtesy of noppasinw at FreeDigitalPhotos.net
Accounting for your rental residential investment property; general taxation advice.