Living In Australia - Impact of Negative Gearing from an Irish Tax Perspective

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BobbyFowler

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Myself and my wife moved to Australia 3 years ago and are currently undergoing a Permanent Residency Application. This should be granted in the next few weeks. We own 2 houses in Ireland. Both houses have been rented out since we moved here. Neither mortgage is covered by the rent we get. Australia has a scheme around negative gearing. With this we can offset losses on our rent shortfall against our tax. This can only be done by Permanent Residents. If we were to avail of this we'd have to declare both properties here in Australia. Can anyone explain the tax implications from an Irish point of view if we were to go down this route? I'm going to do some research on this end as to the Australian Tax implications. Thanks.
 
did you not have to make a full declaration of global assets for the Permanent Residency Application?

It seems crazy that you can hide your net liabilities in Ireland to square the Permanent Residency Application and then expect the Oz taxpayer to subsidize your losses here.


"By allowing ordinary taxpayers to deduct their losses from investing in residential property against their other (mainly wage and salary) income, the current system provides a significant tax incentive for people to invest in rental accommodation across Australia. "

from
 
I take it you are on a working visa and not treated as resident in Australia for tax purposes. When you become resident you will have to declare the properties in Ireland on your first Australian tax return as a resident.
You can claim under negative gearing on the interest only that you pay on both mortgages.
However if and when you sell the properties you will then come into the realm of Capital Gains Tax....by the Australian Tax Office....if you are still living in Australia and resident for tax purposes.

Sorry I cannot advise on the Irish element of the tax......Good luck with the Permanent Residence...
 
Yes, we're on a Working Visa at the moment. Even in the PR application there was nothing about declaring any assets. The PR is a given as I'm doing it through work. I'll see what the Aussie's have to say about it here.
 
Australia Irish tax

Drop taxback.com a line, they have an expat division. A pal of mine got tax advise as he's moving to thailand to work for a big pharma,
 
As an Irish non-resident you are taxable in Ireland on any taxable profit from your rental income, or can carry forward the losses.
You should also have registered a resident agent to act on your behalf with the Irish Revenue, otherwise the Estate agent or tenant should be withholding basic rate tax on the gross rental income.
You are also obliged to file a non-resident tax return in Ireland each year to declare your rental Profit or loss.

Note, even if you are making an actual loss on your rental income, it is possible that you could be making a taxable profit, as capital mortgage repayments are not tax deductible, and only 75% of the interest repayments are tax allowable.


www.taxingtimes.ie
 
With regard to the Australian situation, this would have no bearing on your Irish tax position, unless you were Irish tax resident.

I have assumed that you are not Irish tax resident, but this would need to be confirmed.
 
Yes, we're Irish non resident.

Thanks for that Domo - I'll pm you about this.

Meeting with an accountant on this side next week. He mentioned the following;

Once you become Australian residents, then Australian tax law effectively
assumes that you have purchased the properties for their market values when
you become residents. You will be able to claim any losses you have made on
the properties against your other income.

If you lived in one of them before moving to Australia, you may still be
able to claim the principle place of residence exemption on that one as you
are still renting in Australia.

The foreign tax treaty Australia has with Ireland should mean that there is
no Irish tax payable on the properties once you become Australian residents.
 
Hi Bobby,

Do you have a phone or email I can contact you on? I am keen to understand more about how you managed this?

Regards,
Mark
0424-204080
 
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