The tax implications of buying property overseas

We’ve all come back from overseas holidays dreaming of buying a property in an idyllic destination and spending extended periods of time there, or even renting it out as accommodation. It’s a fantastic idea, but if you do take the plunge, keep in mind that there are tax implications on investments and earnings.

One of the key definitions is whether you’re an Australian resident for tax purposes, which can get murky if you spend extended periods of time overseas each year.

If you are an Australian resident for tax purposes, you must declare all income you've earned in Australia and overseas. To determine residency there are a number of considerations and statutory tests.

Being an Australian resident for tax purposes for the full financial year allows you to claim the tax-free threshold of $18,200, which you can’t do if you’re considered a foreign resident.

There are also complexities around capital gains tax when time comes to sell. The ATO will tax you on any gains you realise against the sale of overseas assets, but you may also be eligible for an offset if you have paid tax overseas.

If you’re lucky enough to be in the position to consider buying property overseas, it’s worth considering. And don’t let the tax implications scare you off – they’re complex, but we can help you manage them.

As always, if you have any questions, don’t hesitate to get in touch.