Hi
I am a kiwi living in Brisbane for approx 15 years. Have been looking on the internet at Invercargill (my home town) as potential for rentals. I will be there in a few weeks so intend to have a look around. A quick numbers calculation came out approx at 9.5% gain. If anyone has experience recently with this I would love to hear from you.
With the exchange rate at the moment the deposit could be really low but then getting profit back to Aust has it's disavantages.
Do you lend over there and keep the money there? Pay NZ tax - No Capital gains tax! ?? Anything else to consider?
Thanks
New Zealand Investing
Mon, 10/06/2013 - 1:46pm
#1
Brenda H
New Zealand Investing
HI Brenda
I am a Kiwi too, I have actually moved back to Auckland since starting this course as the NZ market is so good right now and I am investing full time.
Auckland and Christchurch are leading the price growth, currently experiencing about 15% growth pa each.
The smaller towns are slowly making a come back and good yields are still possible, however the capital gains are a lot smaller, and there is a lot of internal migration to the bigger cities. If you are still keen to buy in Invercargill I would only be looking to buy a property at a 20% discount.
You can still get 8% yields in South Auckland pretty easily, I invest in Otahuhu, Mt Wellington where you can find a 6-7% yield easily and then renovate it to increase the rent to get a better yield.
NZ banks would treat you as an Australian therefore you would hav trouble getting anything higher than a 80% LVR and the servicability is calculated differently due to your Australian income.
You will need to talk to both a NZ accountant and an Australian accountant. Whilst New Zealand doesn't have a capital gains tax, if you as an Australian tax resident purchased a property in NZ in your own name then you would be liable to pay a capital gains tax in Australia. If you were to do it through a trust then it would all stay within NZ. A company is a little more complicated as technically the profit stays within the company but in your Aussie tax return they will ask you if you have an interest in a foreign owned company and if that company made a profit.
If you want to know anything else about what is happening in NZ I am happy to help you out
Financially free by 22/05/2017
Hey Kyron
Thanks for replying. Really appreciate your advice.
Brenda
Hi Brenda,
I used the following broker to guide me through purchasing my NZ property. She lives in Oz but is an ex-kiwi so had some helpful tips.
If you are going to use a trust make sure it is an NZ trust as the NZ banks won't allow you to use an Australian trust.
I found the process fairly simple.
Thanks for you reply Barb. You didn't give me the name of the broker in your reply. Does she have a web site/email? Thanks again.
I own properties in invercargill and dunedin and have been in the market since 2003. I am an Australian in Melbourne.
Yes you need to engage a NZ accountant and lodge NZ returns if you make a profit then you will need to delcare this in your Aust tax return. I have more ot loose by not delcaring. Although no CGT in NZ they have a depn clawback if you sell then you need ot pay back the depn you have claimed.
I borrow in NZ with NZ banks (despite them owned by Aus banks - they dont talk to each other). The market is great and there are many market inefficiencies - mainly in Invercargill - high yileding proeprty in one street and then lower yeilds close by. I have rennovated / manufactured growth in rents and have added value.
You do need to do homework on where to buy in Invercargill / dunedin. Dunedin is a uni town and I buy for cap growth (which has been good until 2010 and has slowed down) - invercargill has a dairy industry / SIT which are the main drivers - I buy lower priced properties and do them up (not myself) . Dont buy without seeing them as there can be issues - insurance is starting to be an issue if you have an older property and insurance costs have climbed massively over the past few years. I also go through a NZ brokers for insurance and loans and they are very helpful.
I have found NZ investing great fun , frustrating - due to the distance if issues arise - but it is econimically stable and with low interest rates and attractive place for foreign people to study, learn english. Good luck.
Hi - I am curious how you borrow money in NZ from NZ banks? Do they still look at your finances and income etc in Australia? Do they have different LVR requirements because you aren't in the country. I would be really keen to invest in NZ as I love it so would be interested in any info you can pass on about how you go about it.
cheers,
Jessie
Hi Jessie
Yes they do look at your Australian income - weirdly though they do it an exchange rate of about 80c Aussie:$1NZD even though it should be the other way around. This is to take into account currency fluctuations. So if you have a low income already it will look even lower on the banks books.
Yes there are LVR restrictions, as an Aussie you can only borrow 80%.
I can recommend a couple of good brokers if you want them. I have started up as a buyers agent in NZ since starting Steve's apprenticeship. We deal with Aussie clients all the time.
Financially free by 22/05/2017