Can I let to a family member if I am overseas? If I am a New Zealander and have non-residence status and working overseas. Can I let a rental property I want to buy to a family member? Do I have to set up some sort of trust and if so what sort? How much and how long does that normally take - I am about to put an offer in on a property and want to do it correctly from the start.
Our expert Mark Withers responded:
Regardless of being non resident you can still let a rental property, nobody can stop you letting it to a family member if you wish. If you do it personally you will need to lodge an IR3NR tax return to declare the income derived in NZ. If there is a profit you pay tax in the normal way. If there is a loss there may been the need to scale back your deduction of expenses if the family member is paying a below market value rent.
There are quite complex tax rules around trusts with non resident settlors and trustees. Unless there is a very good reason to use a trust I'd consider it a problematic structure given your non residency. Remember to also take advice in the country you are resident in about the tax concequences associated with the NZ rental.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.
More Answers About Tax/LAQC
Can a Trust help me offset property losses? Can a family trust transfer losses from rental property to a beneficiary in addition to income from other investments such as shares and unit trust?
How should I structure my assets? I am single and want to build a property investment portfolio. I am a first home buyer with no real estates.
I also look into setting up an office and beauty therapy salon in a city apartment and use it as an office and for business operations (either rent a space or buy one).
I want to seek for the best structure to own the property portfolio. Should I set up a company to manage the rental properties investment? Or under a trust for asset protection purposes? Or simply own it under my personal name?
The aim is to minimise tax legitimately, minimise compliance costs and time, asset protection (say if in the near future he gets into a relationship), and flexibility (may potential go for work OE, leaving the rental property in NZ during OE period and hope for capital gain)
Types of current incomes are:
- Salary (at 33% bracket at the moment but may hit 38% bracket in 2011 income tax year)
- NZ Dividends from share investments (fully imputed)
- PIE at PIR 30%
Transfer of ownership to LAQC process We bought a house in Auckland, lived in it for a year. Moved to Christchurch for work so set it up as a LAQC. However the title of the house is still in our names not the company of the LAQC. Our bank set up a company account to direct mortgage and outgoings. We are now returning to Auckland and want to move back into it. Should the company name be on the title of the house? Have we been running it incorrectly?
Protecting properties through structures I have 3 properties under my name, and I’m looking into:
1. Create a structure that will help protect these assets (when I will enter into relationship in the future – I will want to protect it from spouse claiming part of it).
2. A structure that will enable me to continue offset the losses against my income( I am working full-time).
I was advised to initially move the properties into an LAQC (which will enable me to continue offset losses, but won’t protect from spouse situation), and when entering into a relationship, move it from LAQC to a Trust(with me being the trustee).
My questions:
1. Will this solution achieve the 2 primary goals?
2. Are there any tax(depreciation) recovery when moving properties from LAQC to a trust?
Claiming depreciation Hi, my question relates to claiming depreciation for a investment property currently being rented, and is in two parts-firstly I have purchased ($575000) an investment property in Queenstown, and trying to work out the depreciation rate I can claim back on tax. It was built in 1996, 3bed 2bath residential freestanding home, 196 sqm and detached garage 46 sqm. Secondly, if I claim depreciation on my tax return, further down the track (i.e.- years to come) if I sell the property do I have to pay back what has been claimed in depreciation to IR as a form of capital gains tax (or other kind of tax)?? working on the current laws of today! I appreciate your assistance- regards John
Australian tax query I am an Australian tax resident and a New Zealand citizen. I have 2 properties in NZ which I have to sell and with the proceeds I intend to buy outright a retirement house back in NZ. I would like to know how long one has to be back in NZ as resident so as to avoid the capital gains from the Australian tax office? What asset protection is available in this case for my retirement property? Many Thanks.
How should I re-structure if I relocate overseas? I have 4 investment properties (I am the guarantor for these investment loans) in the name of a LAQC, and my own home (no loan) in the name of my family trust.
I am the sole shareholder of the LAQC and one of the shareholder (the other is my solicitor) of a trustee company which is the sole trustee of the family trust.
How should I re-structure my assets if I move to and work in Australia. Sell LAQC to Family Trust? No change?
Tax minimisation and asset protection will be important.
Will potential CGT be retrospective? If a capital gains tax does come in will it be retrospective, i.e. going back to when you first bought the house, or based on the value of the house starting on 1 April 2010 (assuming CGT came in budget 2010). In other words will you have to pay for past capital gains when you sell a house in the future or will you only pay for capital gains which occur from the time the change occurs? What is the more likely?
Leasing land tax implications? We have a number of sections and a house in a LAQC and are classified as a property development company subject to capital gains tax. We are considering leasing the sections for 5 years with an option to the lessee purchase at the end of the lease period. Can you advise what the tax implications of this arrangement will be?
Can I claim a rental loss from my Trust when I am residing in it? I have a family trust with a property that has been rented until now. I am now needing to move into the property myself. I understand that you can't rent a property owned by your own trust and claim tax. The family trust has a mortgage and has insufficient income to pay it without rent. What is the best way to do this?
How can we minimise our losses from overseas? Myself and my partner moved to Australia two years ago, leaving behind our rental property in Wellington. We are currently renting it out to friends of ours, and the rent falls short of the mortgage repayment by approx $50 per week. This year we have spent approx $2000 in maintenance also.
What is the best way to maximise our return, and minimise our expenses? Someone suggested setting up a company to minimise our expenses.
Any advice would be greatly appreciated.
Are subdivision costs tax deductable? My wife and I, in partnership, have built and live in a second house on our property borrowing against the existing property which we have rented out for more than a year now. We have been advised to subdivide the first property off so we have a separate title and can form a LACQ. We have just completed this. Are the subdivision costs tax deductable for the partnership (not LACQ yet)which is liable for tax on the rental received so far?
Can I claim depreciation on insulation costs? Can you advise if the IRD would treat the costs for ceiling and underfloor insulation as an improvement to be capitalised and depreciated or essential maintenance? I have recently fitted both in a rental property but did not go through the EECA scheme as a direct route was more cost effective even with the government subsidy figured into the equation.
Would IRD view this as tax avoidance? I bought a new house this April, and rented out my old unit at the same time. The mortgage for the new house is secured by both properties.
The interest payment for the unit is about $150/week now, but the rent is $300/week, this means I'm making profit from rental property, and have to pay tax at the end of year.
Both my wife and I own the properties, and we both earn about $70,000/year. If we set up a LAQC now and sell the rental unit to it at current market value, take the money out to pay off some principal of my new house. Also we may claim the loss on rental property now, but I'm not sure if IRD will be happy about this, Will it be considered as tax avoidance? Thank you very much for your help.
Tax and proceeds when selling overseas property We have recently moved from UK to New Zealand to work - hopefully permanently. We still have a house in UK (unlet)and have just purchased one in NZ in which to live. Assuming we stay here in NZ do we have to sell our UK house within 4 years of arrival to escape having to pay tax on the proceeds? If after 4 years how much tax do you have to pay? Is it at your normal income tax rate? Is there anything we should be aware of in order to minimise our tax liability in NZ? Do we have to lodge the fact we have bought our house here with a view to permanent residence. Currently we are on a 2 year working visa even though we intend to stay permanently.
LAQCs and foreign companies Can you please tell me if we are still able to have the house as a LAQC if we live in Singapore but intend to move back to NZ in 2011.
My husband and I have a property in NZ that we began renting through Braziers in June 2008. We left NZ for overseas at the same time. My husband worked April, May and June 2008 in NZ.
(1)Can we offset any tax from this income?
(2)What are the tax benefits that we could be making use of?
Currently our rental repayments don't cover the mortgage repayments and we are subsidising the difference.
And finally later this month I will be earning some NZ income but it will be less than $2000 per annum. Can this help our tax/LAQC situation?
Can I claim expenses incurred during renovating? I own a rental property but have not had tenants in it for the last two and a half years because I decided to fully refurbish the house after the last tenants left. This task has taken a great deal more time than I had anticipated, mainly due to unexpected family problems.
My question is this - can I claim back expenses incurred during the upgrade process - in the absence of tenants? I have kept all the receipts for decorating consumables, new flooring and so on.
Double tax whammy I am residing in NZ and investing in the development of a property in Australia. I am borrowing to send money over as a loan to build/develop the property. I understand the loan & interest incurred can be repaid back to me without being taxed, but how can I avoid paying 2x tax on the profit (NZ& Aust tax)...can the profit be gifted back??
Am I liable for capital gains tax? I am an Australian citizen wanting to purchase an investment property in New Zealand.
I note that New Zealand currently has no capital gains tax.
I may need to bring some trades in to renovate my prospective property as the level of expertise needed is not available in NZ for some trades. I may also need to import some special materials.
Can you inform me of how the taxation system will treat these 'strange' strategies and if I will be liable for CGT in Australia. Thanks for your advice.
Should we restructure into an LAQC? Hello, we have a rental property which is about to start paying an income and is currently paying principal & interest and we have a healthy equity in it also. My question is should we put the property on interest only and finance it up to nearly 100% and transfer the equity off our own homes mortgage? I'm nervous about running at 100% but that is what we have been advised to do as well as set up a LAQC. Our goal is to pay off our homes mortgage which is has 50% equity and have one or more rental properties to top up the pension in our later years. P.S we are only in our 30'S.
What is a depreciation schedule? Well its tax time again and I have just purchase a investment property. Could you please explain to me what is a depreciation schedule? Why I need it for tax purposes? Where do I obtain it? Your help would be greatly appreciated?
Can I live in my depreciated rental? I am currently renting out my house and have been completing tax returns and depreciating things as per recommendations and tax advice (I have been overseas for the past three years with an authorised person completing these tax forms and am not sure things have been depreciated for the past three years, but the three prior have been depreciated).
I unfortunately need to give my tenants notice to move in there myself.
Are there any tax repercussions? (apart from no longer depreciating and completing a tax form etc for the house as it will no longer be a rental).
Jo
How do I get chattels valued so I can claim depreciation? We are just about to take over our 1st investment property. Could you please explain about getting the chattels valued so we can claim depreciation on these later when we complete our taxes. Is this valuation done by a professional or are we able to do it ourselves?
Can I claim for my maintenance time through LAQC? My husband and I have four properties in an LAQC, two of the properties being multi-tenanted. We spend a lot of time maintaining them ourselves. For example, last week I painted a new deck and stairs for five hours, after my husband had built them. Can we claim for any of the hours we spend maintaining our properties through the LAQC? If we wrote an invoice charging our time to the LAQC is this allowed? If so, what kind of hourly rate would we charge? thanks
Can I claim for repainting my whole investment property? I have owned an investment property for 5 years, and I now want to paint the entire house/roof. I would like to know if I can claim for the full amount, as I am not painting the house in order to sell it, but rather I am just replacing the paint which has gradually worn away over time.
Thanks very much.
Mike.
How should I structure my assets if moving to Australia? Hi Mark
Firstly I would like to offer my appreciation to you for your replies to various questions asked by members. Thanks for your support.
I am planning to move to Australia and work & live there with my family. Here in NZ I have my own home and 1 investment property which is a rental. Both properties are mortgaged with the bank in mine and my partner's names. We are planning to sell them within next 2 years.
When I move I will be renting out my home property.
I want to know :
a) Can I take Mortgage with a NZ bank and leave to Australia.
b) How to handle the tax part of NZ.
c) How to avoid paying the Capital tax in Australia.
Your reply is highly appreciated.
Thanks
Joy
Relationship separation; how do we un-structure our portfolio? I have been in a de-facto relationship with my ex partner for more than 3 years.
We set up an LAQC owned 50% each to buy properties that we have decided to assign as not the right moment to sell: what's the best way to go with regard to the valuation of the properties? A shareholders agreements witnessed by a lawyer or a registered valuation and simple shareholder resolution?
My ex partner owned some other properties before we met through a LAQC: I have the right to claim 50% of those properties even if I have not contribute to their purchase?
Comments around Capital Gains Why is it that there has been an amazing absence of comment on the National Party statement that they are looking at not taxing the property home but are looking at taxing one's investment property? Should we be selling up immediately or should my wife and I be separating at least legally or should we be crossing our fingers and waiting to see what happens? To be serious the property we currently hold is according to the body corporate rental only not owner occupier so separation is not a real option? What do you recommend or are you crossing your fingers too?
What should I consider prior to leaving NZ and my rental? Hello, my wife and I are considering a move to live and work in the UK. We have a house in our names and wish to keep it, rented out, with the intention of returning to it in a few years time. We plan on using a property company to manage it and want little or nothing to do with it whilst we are away. What's the best way to ensure its kept safe i.e. trust/private ownership and what are our obligations to the IRD or anyone else. Thanks Dan
Can we claim any expenses in the 12 months prior to settlement? We bought a rental property in my partner's name at the request of the vendor. We settled 12 months later in my name at my bank's request. We borrowed 50% each from our respective banks.
My partner has his loan for the rental secured over our own home. Our home is mortgage free.
2 questions. Are we able to claim any expenses we had in the 12 months prior to settlement. Namely interest on the deposit, even though we did not collect any rent in this time.
Next question. We have both been claiming the expenses, some repairs and some interest, against the rental income and wages and salaries. As the house is currently in my name only but my partner took out his loan for this property is he able to claim his portion of expenses.
Many Thanks for your help in clarifying this for us.
Is LAQC a good option for us? My husband and I are looking to purchase our first investment property. He is a self-employed and I'm a recent graduate looking for a job. We have a company owned majority by our Trust, who then contracts job to him. We are unsure of how to structure our loan and home ownership? Is LAQC a good option for us?
How should I structure an investment purchase? We have a mortgage free joint family home and are looking to buy a bigger family home which I would like to put into a trust. We can purchase without having to sell our current house first, which I am considering. If our current house proves hard to sell in the current market, we have the option to rent it out. With it being mortgage free, there are possibly no tax benefits to this unless we can transfer to the trust at market value and split the remaining mortgage by say government valuation. Is this feasible? Would an accountant set all this up?
What are the advantages of having a Trust? An accountant told me that a set of accounts for a Trust costs about $1800 per year. What are the advantages of moving a rental property into a Trust considering the cost for a set of accounts and any other costs related to running the Trust? The rent I am receiving is just covering the mortgage payments.
I sold my Trust to our LAQC, do we pay tax? My family trust (set up by myself) has recently sold it's long-term investment property into an LAQC (owned by myself & my husband) so we can take advantage of the tax benefits.
Is the profit on the sale part taxable (depreciation recovered) & part non-taxable (capital gains) or all non-taxable capital gains?
Also, do I include the capital gain in my trust return or only any taxable income?
How does gifting to a Trust work? I have a question regarding transferring a house into a family trust. I will use an example to illustrate my question. Bob has a house with current market value of $800,000 he has $300,000 equity in the house. He sets up a family trust, the trust then has to borrow money from Bob to buy the house, and then Bob starts the gifting process. Does Bob have to gift the the full $800,000 across to the trust, or just the $300,000? If so, what happens to the remaining $500,000 that is still owed to the bank and how does this get into the trust?
How can I make mortgage payments tax deductable? Ten years ago and sold my home to a Trust. Unfortunately my lawyer missed transferring the title. I service the mortgage from my personal bank account and have done 3 giftings since then.
I moved two years ago and the property is tenanted. I believe I cannot claim tax on my mortgage payments as I used to live in this house. I have heard that one can get around this problem by selling the property.
The home was already sold to the Trust while I was living there. The mortgage and payments are in my name. How can I make the mortgage payments tax-deductable?
Transferring from trusts to LAQCs I have a property that I purchased 18 months ago and put into a Trust initially. The rent doesn't cover mortgage/rates/upkeep. I plan to have the property for another 6 years, but was told to put the property into a LAQC and gain a benefit of a lower personal tax rate.
Would it make more sense to go ahead and rearrange it? (I also plan to buy another rental in 3 years time.)
What tax liabilities do I have as an Australian resident investing in NZ? I am currently living and working in Australia, I own 3 properties in New Zealand and will be purchasing 3-4 more over the next two years.
The existing properties are in my name, however I am considering gifting these to a trust and making all future buy and hold investments through the trust.
I wish to use the Trusts Online service as it affords me the flexibility to control the operations of the trust quickly and effectively from here in Australia however my parents are reluctant to act as trustees for me as they think any web based trust company must be a scam and that they can become liable for bad debts if things go pear shaped, is this true?
Also, if assets are in my name in New Zealand are they up for grabs I am sued by a creditor here in Australia?
Should I purchase my second investment through LAQC? We currently have an LAQC with one negatively geared property within it. We are looking at securing another investment property that is positively geared. Should this also be purchased under the LAQC which we were lead to believe was predominantly for losses/tax benefits? Or should we keep this separate? Look forward to your reply.
To Trust or not to Trust, which is the best option? My husband and I have been living in overseas for the past 3 years.
We are NZ citizens but not NZ residents and we are planning on returning to NZ in the next couple of years. We own two houses in New Zealand that are currently in two different trusts. Which is best; keep them in a trust and merge the two trusts into one? Or get rid of the trusts and set them up as a company? Are there any implications because we are not NZ residents if we set them up as a company?
Look forward to your reply
Katrina
Will I have to pay tax on any capital gain? Myself and ex-partner are both shareholders at 50% each of a property company that owns 4 properties.
We are now separated and are thinking about winding up the company.One option would be for one shareholder do buy out the other.
Is the capital gain on the selling of shares taxable as income for the seller?
Or there is a better way to winding up the company in order to minimise tax?
How can I reduce my tax obligations? Hi, we moved to Australia last year for work. We own a home in Tauranga which is rented. We rent in Australia. What tax obligations do we have for both NZ and Australia with regards to this property? Our home has a mortgage and both are in our personal names. What can we do to reduce these obligations to both NZ and Australia tax departments?
What are the benefits of an LAQC for overseas investors? My husband and I have a home in NZ which we are renting for 2 years. We are relocating abroad during that period. We will sell the property after 2 years unless we can find suitable long-term renters. I am wondering if we should set up an LAQC or not. We are not covering our mortgage with the rent - we are putting in $500 a month + expenses into keeping the home. We have no NZ income. We both will reside in US and paying US taxes on our income. I am not fully understanding the benefits of forming an LAQC.
Should I start a Trust or LAQC? I currently have a rental property in an LAQC it is negatively geared. I want to buy more investment properties that will ideally be cash flow neutral/positive. Is it best for me to start a form of trust, as the properties wont be making a loss? I'm 20 and plan to own many properties long term. thanks
How do I sell my home to my LAQC and rent it out? We have our own family home that has a mortgage of less than $10,000, with the aim to be mortgage free very soon. We also have a negative-geared rental property owned by our LAQC with 100% finance of $420,000. We are wanting to buy a bigger family home and since our current home is worth approx $560,000 we would like to know if (and how) we can rent out our current family home (via sale to LAQC?) and draw down two loans (one using existing family home equity, which would become our new rental, and one against the new family home) to buy a new family home. Could you please advise if this is a good idea and if so, how to go about doing this. Joe.
Can I rent my property from my LAQC? Hi, Is it possible to sell a home (which I own) to a LAQC and rent the property back to myself. Is it acceptable to IRD, and what tax benefits can I get by doing so?
How can I be more tax efficient with overseas investment? I have rental property in Adelaide, mortgage 450 p/w week, rental income 340pw.
I work in New Zealand, can I use this to be more tax efficient in New Zealand, how do I do this
LAQC or Tust? Which is the better option? I have a ltd company(mobile service) and a LAQC (import). I am the director of both. At present the company rents 60% of a property (residential) for business. My question is if I buy the property would a trust or the LAQC be the better option taking into consideration that the property would be for long term investment? Also can I claim any GST back on the the 60% the company uses when I buy the house (GST on the sale price). The over-all goal being minimising tax.
Which is the best option, Trust or LAQC? My wife & I are about to purchase our first house, our long term goal is to get into rentals. The house is currently rented for $250/wk for the downstairs flat, $400 upstairs flat, but I can add another downstairs flat giving us an additional $200/wk. We would have a mortgage of $440k. I am starting my own plumbing business. The house needs some tidying up (reno cost is incl in mortgage). We have to move out of our current rented house but current rentals in town are $400+ pw. Would a trust or LAQC be the best option, as cashflow will be sporadic?
If I rent from my LAQC, what are the tax implications? I am recently separated and want to get into a new property and start a new life as soon as possible. Unfortunately I am not in the best position to do that now. My mother is set on helping me out. We can afford a suitable property that I can share with my children. My mother will not be living with us but wants to put in and make sure we get a good place. I want her to benefit from helping me out. Can we set up an LAQC with the two of us shareholders and purchase the new property which I then rent? I would not take any tax breaks or benefits but could still use my income over and above rent for debt servicing to obtain the required finance. Meanwhile my mother will be able to offset her interest costs against her personal tax liability. Then when I am in a position to purchase the property outright (possibly 5 years)I can buy her out at market value and she will profit. Am I missing something?
How do I get the full tax benefits of a LAQC? I am currently the owner of two properties, my intentions are to convert my second property to a LAQC and rent it out.
My understanding is that previously one could claim all losses (difference between rental income and loan repayments)back.
I am now informed that I cannot sell this second property to a LAQC for more than my initial purchase price or my initial purchase balance at the bank!
This will render the exercise totally futile as the tax breaks are particularly aimed at the value of the property.
Is this true, and if so, what are my options as I would like the full tax benefits from a LAQC as this was my initial understanding, has this indeed changed?
Thank you.
Has Capital Gains Tax become law? We are looking to buy our first home and we have been offered a good deal through a family member; the house we are currently renting is the house we are to purchase.
However, the purchase price has now risen by $9000, apparently after he consulted with his accountant and was told that he would end up with a large tax bill and legal costs.
I didn't think a capital tax gain law has been passed into law?
Is this correct, will he get a large tax bill?
The property GV is $269000, he has had the property for about 8 years now and he is selling to us for $209000, so I would think if anything he could write off his loss in his personal tax, not end up with a tax bill?
Your clarification would be much appreciated.
How many directors should I have for my LAQC? Hi Guys, can you help us please? We have just purchased our 2nd rental property in our LAQC. My wife & I have a 50:50 shareholding and I am the sole director. Our new lawyer has said that we should both be directors so that one director can not do anything without the knowledge of the other, therefore making the non-director and other shareholders liable for business decisions that they had no knowledge of.
What do you think of that? Should we make the change?
What info do I need to give IRD for tax returns? I have had a rental property since 2000 and have made no tax claims on them. I wondered, if I do go to IRD, what info I need to provide them with and how far back I could claim if I can claim? Rent received never covered all of the mortgage or the rates and insurances.
How do I offset property tax if I move to Australia? Hi, I currently own 2 investment properties in my LAQC in NZ. I am receiving a tax benefit on them by claiming losses against my personal income in NZ.
Would i get the same tax benefit if I move to Australia or will I have to forfeit it completely? Can you suggest what I should do as I may be moving to Australia in the near future. Thanks.
Is an LAQC right for me? I'm a UK Citizen, NZ resident and a sole trader paying 39% tax and am looking to buy and hold many investment properties over the coming years. I'm single and may return to England for a year or two before coming back to work in NZ. My accountant has advised me to set up an LAQC but I can't see any extra benefits in doing this. Keeping them in my personal name may actually give me more flexibility when I return. Personal name seems to have the same benefits so what's the point?
I'm a Kiwi living in Australia, how do I file my property tax returns? I'm a Kiwi from Dunedin living in Sydney.
I own an Investment property in Dunedin (with a mortgage) and I'm finding it very hard to get any info on paying tax on it or claiming in Australia.
Also the Capital Gains Tax (legal robbery) if I was to sell.
Everybody including tax advisers and accountants either shy away or give me different answers.
One main question is due to the different financial year dates between countries, how do I put my tax return in Australia showing NZ if the (tax) year hasn't been done in NZ?
Thanks for your time,
Great website!
Why should I restructure my assets if no beneficiaries? I have 5 rental properties plus 1 home in the process of converting to home & income. 2 rentals are owned through LAQC and the rest in my own name. I have just started the process of restructuring my properties by setting up a Trust and transferring the Home & Income property into it and selling the remaining 3 properties into a second LAQC.
After talking to some family members they question the logic in me doing this as I am single male 55 yrs and no kids.This really stopped me in my tracks and thought they are right. Why go through all the hassles when you don't have kids/partner that will benefit from it?
I am now putting the whole restructuring exercise on hold.
What do you think?
Do I need a valuation for depreciation purposes? I have recently purchased a residential property in conjunction with a business partner - we want to claim depreciation on the building. For that we need to know the value of the building, presumably at the time of purchase. Do we have to get a valuation or can we somehow use the rateable value as our starting point and save the cost of a valuer?
Are we committing tax avoidance? Mother and sister form an LAQC and buy an investment property. Mother and son form an LAQC and also buy and investment property.
The son rents and lives in the Mother and Sister's LAQC property at market value, then rents the property in his and his mother LAQC to a stranger at market value?
All parties are offsetting their respective interest costs against their personal incomes.
Is this tax avoidance.
Can we rent out our family trust owned property? Can we rent out our family trust owned property?
Do we get a tax return on loss if we do that? Is it true that the family trust needs to get registered to GST?
Can I claim tax deductability if I mortgage my rental? I have a mortgage-free investment flat,and want to go half-shares in a family home with my partner. Will the IRD let me claim tax deductability if I mortgage the rental to finance the home that we will live in? (My partner may also rent-out her home, and mortgage that to finance the new property.)Thankyou
Do we need a partnership tax number? My wife and I have bought a unit which we have rented out. We intend to split the income between us for tax purposes. Do we need to get a partnership tax number or can we just split the amounts and put it on our individual returns?
Are there tax benefits to owning a rental home? I am wondering what the tax benefits are of owning a rental home that costs more in interest, expenses etc than I receive in rent? How much tax would I expect to get back if there is approximately a $8,000 difference?
Are Trusts the best strategy to avoid tainting? I have some friends who are considering doing a buy and sell. They also have rental properties in LAQC's which they intend to hold on to. I have heard that the best means of avoiding tainting is to set up a series of trusts which sounds quite complicated. Can they do their buy and sell through another company? I know they will be tainted due to association but can they avoid this by holding onto their long term houses and not selling any for 10 years?
What property value do I have to use for LAQC depreciation purposes? I have a couple of rental properties which are held in my own name and I am looking at putting them into an LAQC. My question is what property value do I have to use for LAQC depreciation purposes? I have got a Registered Valuation but due to the Associated Persons test do I still have to use the original cost price when bought in my own name 2 years ago or can I use the new valuation?
What sorts of things can I claim back on from IRD? Hi there
Just received my IR3 in the mail, first year owning a home as investment, I actually don't make any money off this home and have to put money back into it myself to match the mortgage payments.
What sort of things can I claim back on? I cant really afford a accountant and would just like to know what I should do and how I would do it.
Thanks very much
Where can I find info about paying income tax on my rental? I own my own house in NZ and have a couple of people who pay rent to share. We split all bills evenly, and I wonder if there is any tax benefit to paying the extra income from them into my mortgage, therefore paying my mortgage off faster. Are the repayments tax-deductible? I cannot find this information on the IRD website. Thank you.
Would my overseas losses offset my NZ income? I am looking at buying a Holiday Letting Apartment in the Gold Coast where we can holiday as well as let out while we are not there.
The rent received will not fully cover the mortgage [shortfall of about $100pw]
I live and work in NZ [Kiwi]. I read from a previous answer that I would have to file a tax return in Australia and also would need to also submit a tax return in NZ for the property.
My question is would the loss of the property in Australia be offset against my income here in NZ, if so how does that work as I would have presumed I would have to earn in Australia to get any tax benefits?
Also if I run at a loss would I have to pay tax on the rental income in Australia?
Thanks in advance
Jude
Are national travel costs tax deductible? We have set up an LAQC and are in the process of purchasing our 1st property. It is currently tenanted. Our goal is to have tenants until they want to leave (anticipate in approx 4-6 months), do the house up, then re-tenant. Hold onto the house for 18mths - 2 years, then sell for a profit. Are the costs of our national travel to inspect the property tax deductible? we had a conditional contract for purchase at the time. And should we depreciate, or will it just be a hassle when we sell it for a profit in 2 years (approx)? And are the costs of the mortgage documentation bank fees tax deductible? thanks
Is tax payable on the sale of a property? I have 2 rental properties. One that has been my home for 8 years and now rented for 7 years. And one that has been bought 2 years ago to move into but rented until we can afford to.We currently rent.
How does the taxation law apply to me on each property in regards to capital gains tax if I sold now or should I wait.If I occupy each house for a time does it become my family home, in regards taxation on capital gains?
Is it wise to wait for any changes that have been talked about by reserve bank, or should I act now?
Do we have to pay any tax on the rent we receive? We are planning on buying a property that is a home and income. We are planning on renting the downstairs section. Do we have to pay any tax on the rent we receive? Do you have any other advice on administering a home and income? Thank you.
Can I rent the property owned by my LAQC? Hi,
Myself and my wife have set up an LAQC with another couple each having a 50% interest in the company. We have recently obtained our first investment property and are now looking for suitable tenants. I had an idea of us being the tenants and paying rent to our LAQC. The reason for this is that we currently rent ourselves so we thought, well why not pay rent into our property. I asked our accountant and seemed to think this would be ok but I have received some further advice from a PI advising against this.
What are you thoughts?
What tax am I liable for on properties bought through my company? A friend and myself have opened a company and purchased two sections with $10,000 deposits on each. We have sold both of them making a profit of around $150,000 before titles are through.
What tax will we be liable to pay? I have heard of putting shareholders in to lower the tax rate?
Your advice would be great
Am I subject to CGT if purchasing 2 properties per year? Re: Section CB 14 of the Income Tax Act 2004
The way I understand this Section is that it's essentially excusing everyone from paying CGT on the property they reside in, except if one has "engaged in a regular pattern" of buying and selling the property they reside in.
So my question is, how often can one legitimately buy and sell the property they reside in before they have "engaged in a regular pattern" and therefore subject to income tax (aka CGT)?
Is it one or two or more properties a year?
What is taxable activity when subdividing land? Hello
Can you tell me in what circumstances is land subdivisions a taxable activity for GST purposes?
This is a tricky question. I am just wondering if I subdivide and build another property if the new property is considered a taxable activity and I have to pay GST.
Thanks
Anne
Do I have to pay capital gains tax? Hi if you decide the sell your rental property/s and they are in a LAQC do you pay tax on the capital gain the property may have achieved over your ownership period?
Can I sell my LAQC owned house back to myself? Hi can you please advise me on my situation any advice would be appreciated.
I have a rental property in LAQC a couple of years now l am thinking of moving back, in a year or so as l prefer the area to where l am living now, what would be my tax obligations in getting rid of the LAQC and sell back to me in my name. the property still has a mortgage in the company name.
Can my LAQC claim back GST? We are currently selling our house into our newly established LAQC. We have been told, the LAQC will be able to claim back GST on the purchase price of the house. I am unsure whether this is calculated on the price we bought it for $455,000 or the new value which we are selling to the LAQC for of $600,000? We understand we will have to repay this on sale of the property unless it is sold as a going concern.
How should I structure my property rentals in terms of taxation? I have a small property development company which ranges from trading to development under the same roof. I have now purchased a rental property and plan on building a portfolio of rentals with the intention of keeping long term to create cash flow in the future leverage. Do I keep these rentals under the same roof or create a new structure? Could there be any benefits?
thank you regards campbell
Tax obligations for overseas investors In 1994 I emigrated to NZ from the UK. I purchased a NZ property in 1996 in which I lived in until 1999. From 1994 to 1999 I was a tax resident of NZ. I moved to Australia becoming a tax resident from 1999 to 2001. I returned to the UK in 2001 and currently a UK tax resident. Since 1999 I have rented my NZ property out and file non-resident tax returns. If I hang on to the property and repay my mortgage next year, I could be looking at maybe $9000NZ in net rental income. My property has doubled in value since 1996 and is now worth approx $350K to $400KNZ. Problem: I own a house in the UK which I bought in 1992. This was my home until I emigrated to NZ in 1994. I rented it out from 1994 to 2001. I filed non-resident income tax returns with the UK IRD. Since 2001 I live in this property again. What are the tax implications with selling my NZ property? Many thanks, Stuart
Living in my investment property, what do I do with my LAQC? Hi
I bought a property 18 months ago as an LAQC. I rented the house to tenants for the first 12 months. However they moved out in November last year and I moved in to do some renovations to the house both inside and out. An accountant friend advised me that this was ok as the sole purpose for me living in the property was to undertake work on it. I have been living there almost 5 months and the work is almost complete. For a number of reasons I have recently decided that I would like to continue living in the house rather than rent it out to tenants. But I’m not sure what to do in regards to my LAQC status and up coming tax returns? Should I file one last company tax return for the year ending March 31st 2007? And then dissolve the LAQC? If so how do I do this? Thanks Shelley
Moving overseas, how do I structure my LAQC? My partner and I are moving to the UK for 3 years we have set up an LAQC and are transferring the mortgage across to it. Originally purchased for $395k. We have had a valuation done at $410k. We plan to purchase a second rental in NZ while we are overseas.
I have contacted my bank and they are happy to swap our house over to the LAQC at no cost or change to our mortgage rate. When we draw up the sale and purchase agreement at what price do we put it through as? The original purchase price? Or at the new valuation price? What happens to the mortgage if we use the valuation price?
Is the interest on a loan for a Proportional Ownership Property tax deductible? With the increasing prevalence of Proportional Ownership Properties on the market I was interested in whether all the interest on a loan for one of these properties would be tax deductible. For instance say you owned a 1/6 share of a holiday home and you used two weeks of your share of 8 allocated weeks for your own use and rented out the other 6 weeks. Would the IRD view this as the property being available for 6 out of 52 weeks or for 75% of the time - that being 3/4 of the time you are allocated for the property? Also would you apportion the depreciation as 1/6 of assessed total value?
How should I structure my NZ rental whilst overseas? Shortly I will be moving to the UK and intend to be working there for the next 3-5 years before returning. I have a house here in my name which I will later use to leverage into rental property, but for the mean-time I will rent it out using a property manager. My personal income will be from the UK only, topping up rental income to pay for management, mortgage costs. Will I be taxed (a second time) on the money I transfer to NZ? Can I claim management/repair costs? Realizing I cannot claim interest, is it worth me setting up a LAQC or concentrate on paying off my house?
How do I protect my LAQC in case of divorce? As we plan to invest in property, we have been recommended to create a LACQ under my husband name for taxes purposes.
We already have a property under a trust.
Can I be included in the LACQ, if not how can I be protected in case of divorce? Will the property be share between us legally?
Should I establish a company or remain individual owner? Hello,
My wife and I intend to buy a section(for about $300,000) with the intention to build for retirement purposes in 5 years time, and need to borrow approximately 60% to do this. To ease the burden of the high mortgage repayments on this land can I claim the GST back on purchase price if:
We set up a company to purchase this, with the intention of on-selling the section to ourselves for much the same price(in say, 5 yrs),and obviously paying at least the same GST back to IRD ?
Arranging debts to reduce tax liability I have two tax inquiries
If $70,000 bank debt is incurred, ($200,000 on purchasing a commercial property as investment on rental income and $500,000 on purchasing a residential home), how can a family arrange these debts to reduce their liability to tax? Can the debt be used to offset income tax from employment and rent?
How would setting a trust reduce tax liability of a family?
Arranging debts to reduce tax liability part 2 following the previous question.
Is it possible to incorporate any part of the $700,000 debt in the family trust as expenditure to minimise tax liability of trust income.
My guess is that the $200,000 debt incurred in purchasing the commercial property for rent is a revenue expenditure and therefore deductible. But can the $500,000 also somehow be used to minimise tax liabilities.
kind regards
hugh
Where can I find depreciation rates? Hi
Is it possible to get a schedule of the allowable depreciation rates for various items in rental properties.
Romi
Do I pay tax on money withdrawn from LAQC? I have 2 rental properties in my LAQC company. If, in the future, I want to realise the capital gain equity in my properties - for personal use (eg: buying my own home) will this be considered drawing company funds? Will I have to pay tax on any money I eventually take from my LAQC for personal use? Or should I always transact through the LAQC? I can't see the benefit of my company owning the property (rather than me personally) if, when I want to buy my own home, as above, I can't use any money (equity) from my company without paying tax on it???
Is there something I am missing here?
What liabilities do I have as a beneficiary of a Trust? Suppose you inherit a trust set up to assist a family member who is receiving a house and furnishings owned by the trust and pays a nominal rental. This inheritance is an investment of sorts but has some awkward possibilities.
What is the liability of inheritors of a trust such as this supposing the tenant, who the trust was set up to support with the trust-owned home, becomes unable to pay rent & the other inheritors wish to support the the tenant? Is there a way, as an inheritor, to protect yourself from a possible irresponsible tenant in this case?
Is the interest of a refinanced rental loan tax deductible? I am thinking of refinancing our rental property and use the money to pay off part of the mortgage on our own house. Will the interest of the increased loan on the rental property be tax deductible? Your help will be most appreciated.
How do I protect my Trusts beneficiaries in the event of a marriage breakup? I have an established family trust. The trust would now like to purchase a house for my son and his new wife. They will be paying off the house but established equity in two other properties will make it easier to get a loan.
How do we protect the trusts interests but still in he event that their marriage breaks up, assure the wife (only a beneficiary of the trust if she is attached to my son) that her portion of the money she has paid into the house, will be given to her?
If we build & sell, what CGT am I liable for? Hi, After renting for a year,and have just built a house.(currently occupied for 6 months).
We intend to sell and move.
We have purchased 2 sections to build on.
The first section is due for title soon and the second in a years times.
If we build the next home and do the same the next year what are our problems with capital gains tax.
How to structure your assets from overseas I am English and have recently married a Kiwi. We are currently resident (and tax resident) in England, although at some point in the future we do intend to return to NZ. We are in the process of buying our first investment property in NZ, and were wondering how best to set it up for tax reasons. In my wifes name as she has the greatest income, or in my name, or joint names? It would only be a $200,000 investment.
What is the best way to structure assets if subdividing a section? Property development tax structures
If I have an intention to subdivide a large bare section into 2, build two houses and then sell. What is the best structure to execute this? I have an LAQC but obviously don't want to taint the company with capital gains on the sale of the new properties. Perhaps a trading trust? Or is this too complicated due to managing the liability of directors and shareholders of the corporate trustee?
Can we rent out our LAQC owned property? My husband and I have bought a rural property. We plan to build a house on the property in the next 6 months. We want to set up an LAQC for our current property. Are we able to rent out our current property and then rent somewhere much cheaper to save for our new house?
What expenses are claimable if my house is in a Trust? We have a discretionary trust which owns a number of rental properties. We are trustees and beneficiaries of the trust. Our home is not in the trust but is in our own names (we need to sort this out at some stage). Are we able to claim home office expenses in the tax return for the trust given our home is not part of the trust. If not, could we claim home office expenses if we put our home into the trust. Many thanks, Mark.
Is renting the property from our LAQC considered avoidance by the IRD? My partner and I have set up an LAQC through which we purchased our new home and also our sold our old property to the LAQC for purposes of rental. We are renting the new property from our LAQC with the intention of eventually moving on and adding this property to our portfolio. Is renting the property from our LAQC considered avoidance by the IRD?
Protecting your property from sharing with future partner My child owns a property and currently is not in a relationship with anyone, what action should be taken in order to protect his property from sharing with his future partner.
Calculating floor area of your house Hi, what is the total floor area? Does it include bathroom and kitchen, or is it only a summary of all bedrooms plus lounge. We try to figure out what we have to divide our office area by for tax purposes.
How do I structure my Australian assets? NZ LAQC? I have a few properties that I own through a LAQC. I have recently bought a flat in Australia under my own name. How should I organise the tax payments in Australia. Should I make it part of my LAQC - is it allowed by government of NZ? Or should I submit a separate tax return in Australia?
Defining tax positions on a property Does a property have to be positive pre-tax to be deemed a positive cashflow property, or can it also be called a postive cashflow property if it negative pre-tax and positive after tax?
Do I have to pay capital gains tax? We are considering buying an untidy looking lifestyle block in need of a good spruce up. We think we can get well below market valuation. Are there any capital gain tax implications if we sell it in say six months at hopefully a significantly higher a price?
Can my property, held in Trust bring tax benefits? My partner and I both have our own houses. We are planning to move in together and rent out my house. To be on the safe side, we each want to put our own houses into a Trust. Is there a way my property can be in a Trust, but still bring me annual tax benefits?
Tax payable on subdivision of property If I buy a property with an existing dwelling and subdivide and sell using the proceeds from the sale to reduce the mortgage debt on the remaining dwelling (which I retain and continue to rent) will I be taxed on the sale?
Can I claim deductions on a rental I'm living in? My accountant has advised me that despite living in one of our rentals we can still claim all of the regular deductions if the company which owns the property rents it back to us personally. This seems too good to be true. Is it?
Is a trust or a LAQC better for family property investments? Mum, Dad & 2 sons have 10 rental properties (not including Family home valued $1mil). Some cash positive, some not, returning $2790pw. Some have large sections.
We intend to build 4 new houses & 1 minor dwelling. Which is better, a Trust or LAQC? Does family home & son's properties go into separate trusts? What are the tax advantages & how do I utilise these? Should we have maximum borrowing on each property or have them cash positive?
Can I depreciate renovations and new carpet? I have spent about $25K on renovating my rental property. The two bathrooms and the kitchen was done fully replacing the old ones. Also the carpet was replaced for the entire house. Can I write this expense off in one year or I need to depreciate it. I feel as this is not an addition to the existing building but only the replacement I can write this off in one year
What taxes arise when selling property? Hi just wanting to find out as much info on gains taxes on the selling of property and was hoping you could direct me in the right direction.
How much depreciation do I pay? If I have depreciated $15,000 on buildings/chattels for a house under a LAQC over 2 years and I sell my house for a $45,000 profit, how much of the $15,000 do I have to pay back. Assume my marginal tax rate is 39% for all calculations. If you can give me a numerical example that would great.
Pros and cons of LAQC We have just purchased a rental property and are looking at the pros and cons of a LAQC. Currently the property is in both our names and both of us are in the high salary bracket. Having read about the tax rebates that may come with running to a loss, is there any tax that we would have to pay (either under the LAQC or not) when we sell the property?
Setting up an LAQC Should we set up an LAQC? We are in the process of buying our first investment property and the rent will not cover the mortgage. My husband pays tax at the higher rate and we have been advised to set up an LAQC rather than put the house in our own names. With an LAQC, do you have to wait until the end of the financial year to benefit from the tax advantages or can an adjustment be made to PAYE deducted with a different tax code? Is an LAQC the best option?
Claiming losses against personal tax Is their any way you can claim losses against your personal income tax on your family home if you live in it?
Moving in with parents, LAQC or Trust for own home? We have 2 rental properties and 1 that we live in. The rental properties are in a LAQC and the one we live in is in a trust. However things have changed. We will be looking at moving in with my parents to help look after my dad. We would like to rent out the one we are in. Is it best to leave in the trust or change to LAQC? What do you suggest?
LAQC or Trust for tax benefits? I have recently started a small business as a sole trader and my partner and I are wanting to start building our property portfolio. We currently have one investment property but before we buy our next was wondering if we should set ourselves up as a LAQC Company or use a Trust in order to obtain the maximum tax benefits? My partner works full time and is currently on 35K and I expect to be putting most of my profits back into the business. In our current situation which of these two investment vehicles would be most suitable?
Offsetting losses upon returning to NZ I've lived abroad for the last 10yrs. I've bought 5 properties over the last 5yrs in NZ and they are bought under my name. When I get back to NZ this year can I move them all to LAQC and claim 5yrs worth losses against my new income in NZ? If I can't do that, I assume I can move them all to LAQC on my return and claim depreciation on buildings/chattels as if it was year one?
Apportioning shares between partners in a LAQC I am about to set up an LAQC and am not sure how to aportion the shares between my partner and I. As I am the higher earner we are thinking of a 99% to 1% split....can I change this split in the future easily or is there a tax/cost implication ?
K
Tax issues when living in your rental I have bought my first home for $560K and the settlement is end of Jan 07. I would like to clarify few things regarding tax:- (1) If I stay in my rental house ($280 p/w) and rent out the house for say $450. My mortgage would be $800 p/w. Can I claim any tax rebate. (2) If I sell the house within 3-6 months, should I need to pay GST of the profit to IRD (3)If I stay in the house, can I claim any tax rebate? (4) Is there any implications/benefits, if I register the house in say eg. trust a/c. Thank you.
Selling my property to my kids' LAQC My family trust is selling a property to a LAQC, owned by two of my children, who are also beneficeries of the trust. My accountant has said that the trust has to pay a depreciation clawback tax of $12,000 dollars. Is there another way of minimising this payment?
GST on residential rental property Hi
I want to check this out for a friend. She is buying her first residential property for the purpose of renting it out. There are mortgage brokers who claim that she can claim GST back for the investment she would be making. Is that correct? Would like to know more about GST and residential property....
Prioritising your next big move.. I am just wondering what my next big move should be, this is my current situation.I am 32 recently married 2 months ago,been employed at the same company since I was 19, 13 yrs in the pension scheme with $60,000 locked in there.I live in my trust owned home valued currently at 462,000 with a mortgage of 219,000.I have an LAQC valued at 310,000 and a mortgage of 210,000.I have $28,500 of shares and $35,000 in savings in an interest paying bank account.I have no other depts, my rental house needs painting and new guttering which I assume would be $8,000-$11,000.I earn approx $115,000-$140,000 and my wife earns $36,000, no kids yet but maybe soon.My dream is too live on 4 acres with a 320m sq new home and to own a big boat for fishing and overnight stays in comfort, what should I be doing and when with everything considered?
Resource consent liability where a tree is protected I own a rental property where a tenant cut down a protected tree without a resource consent. It is possible that I am liable and may get a fine for this act. I am negotiating with the tenant to pay a proportion of this.
Is this fine tax deductable on my proportion of payment?
Claiming expenses on investment property If you purchase a property with the intention of renting it out, but in the meantime you live in it while you are doing it up, can you claim on the loan interest while living in it as an expense? If so, is there any maximum time limit for doing so? I realise depreciation cannot be claimed until it is available to let out. Many thanks.
Managed apartments & GST law We are looking at purchasing a Managed Apartment in Queenstown as an investment property, and were going through the process of research whether or not we would need to be GST registered, and whether to set up a company or Trust, when we stumpled upon your article dated 19th October regarding property & GST. Does this mean we will not need to be registered? will we need to pay GST on the purchase price? (It is not being sold by a developer) when will the changes take effect? Look forward to your response. Thank you
Should I sell to a LAQC and rent the property back? I own a property in Glenfield and am currently living in it. I currently live in it with my partner and 5 tenants. I know large house and I'm only 21. I am wanting to know if it is possible to sell this house to an LAQC and rent the property back off of the trust. So that I can live there along with my other tenants as well as having the property protected and being able to get any tax relief on the income I am receiving from them vs the interest I am paying. Any help would be great!
How will GST affect my commercial property? Hi, I noticed your article 'Property market takes another hit from GST changes' dated 19 October. I own 2 serviced apartments that were bought zero-rated for GST that are under commercial leases. Under the proposed changes I am curious to know what will happen when I sell these properties - will GST then be due on the sale price? Or can I on-sell under the existing commercial lease without becoming liable for GST (as is the case now)?
Pay or claim GST on the income received from a residential rental? I have purchased a commercial property which consists of a retail area on the bottom floor which leases for $25k + GST, the top floor consists of 2 flats which earn $16k collectively. My question is, because the top flats are residential, do I pay or claim GST on the income received for this residential portion? Normally residential income is GST exempt. PS I have paid/claimed GST on the purchase price of the building(it was zero rated).
Best structure; Trust, LAQC, Company or other? We currently own 2 sections freehold giving an equity of $450k in our own names. We live on one and have a cash investment of $285k. We are about to buy some rental investment properties and are wondering what is the best structure for these; Trust, LAQC, Company or other?
Please can you advise.
Economic slowdown ahead? Hello Experts!
I'm currently in a job and earning between $1000-1500 a week after tax. I own my own home and I have one rental property setup in a LAQC with myself as the sole director/shareholder. It is my first financial year and my LAQC's mortgage is $500 a week. I currently get $300 a week in rental income to my company from the tenants in the property. I have a accountant who has setup the loss to be claimable off my personal paye tax. I have been considering purchasing a second property because I seem to have enough residual income to cover it with or without tenants, I don't really know anyone in the property investment game but every non-expert I do know keeps saying "wait wait" as if there is going to be some economic slowdown or something.
What I am wondering is:
1. Is there any advantage in waiting, other than earning interest on my money?
2. Would I risk losing my tax rebate by purchasing another property which would add to the loss my LAQC is making now?
3. Is there any downside in purchasing now, other than not having as much lose cash?
It's time for me to listen to the experts!
Any help/advise would be greatly appreciated.
Regards,
Will.
Planning ahead for the new GST legislation Hi - my wife and I (from the UK) will be investing in NZ fully managed holiday apartments in Jan/Feb 2007. When will the new GST proposals (your article 19 Oct) take effect? Will they mean there is no benefit in registering for GST (if GST on the purchase prcie can not be claimed back)? Will there still be a need to register if gross income eceeeds $40,000, and does this limit change for multiple properties in joint name (i.e. is the limit per person, per property etc)? What will be the impact on sale of the property? Thanks, Tim
Using your LAQC to benefit your relocation plans My wife and I live in our Wellington house that is almost paid off. We intend to move to Auckland where we are not buying for another 6-12 months. Also, this house would then become a rental investment property.
1. Is it possible to sell our house to a newly formed LAQC, owned by both of us? We would prefer to change ownership at the point of renting out. i.e. the LAQC will make a profit for that period that we do not buy another house, and we would like to have majority of LAQC ownership on the lower tax bracket.
2. Is it possible to take all equity of this Wellington house and loan it to the LAQC, interest free for that 6-12 month period until we do not buy another house?
3. When we do buy our next house to live in, we would like to release the equity from the LAQC for the new house. At this point, the Wellington LAQC will take out a mortgage for this amount.
Depreciation Rates table I understand that depreciation rates for things such as internal partitions, wiring, plumbing etc, have changed recently. Where can I find a table of the new rates?
Can we sell from the Family Trust to an LAQC? We recently purchased an investment property and arranged the fiance with the bank through our family trust, only to find that the losses incurred can not come back to us, can we now set up an LAQC and sell from the trust to the LAQC?
Can items which have depreciated below $500 be written off? I read with interest an article, in the September issue, from Kevin Garty. In the article he stated that fixed assets of less than $500 can now be claimed in full in the year of purchase. Does this mean that more expensive items that have been depreciated down to below $500 can now be written off?
Which structure to use for rentals whilst living overseas I am planning on renting out my current home, moving into another and then renting that out too in a couple of years. Both will then become negatively geared rentals and I would like to travel the world a bit earning here and there and probably end up in Australia and living there for the long term (up to 10 years at least).
Exactly what is the best structure to hold these rentals in if I plan to live overseas: Trust, LAQC, own name, Other?
What is the most cost-effecient option and just what are the tax implications? Also, how long would I need to live back in NZ for so as not to pay capital gains tax if I have to sell one. I realise that I will need to see an accountant, I was just wondering what the general idea is before I get to that point.
Thanks heaps for your time in advance.
Tax implications of selling your property to LAQC I have a friend, Bob, who is considering the following scenario.
Bob owns his family home worth approximately $350k, most of which is paid off. Bob's family is growing and he needs to buy a bigger place. He is considering selling his existing house to his newly formed LAQC at the current market value and fully mortgage that place to 100%.
He wants to use all the equity from this house to purchase his new bigger place.
If all transactions are formal and through lawyers, valuers, etc, are there any pitfals that Bob needs to be aware of in terms of tax?
Tax deductability on a rented property I am wondering what is the position in terms of tax deductibility where home is later rented out. A mortgage was raised at the time the home was acquired for personal use. Does the interest on the mortgage become tax deductible at the point in time the home becomes available to be rented out?
I would be very grateful if you could clear this one up for me.
Deciphering the Relationships Property Act I am considering setting up an LAQC for my property. My situation is that I have met someone and we would like to buy a property together, however, I would like to retain my property as an investment and a fall back if the relationship should go sour. Would an LAQC be the best option for me? I also would like some kind of agreement or trust that says if the relationship breaks down, he is not entitled to any of my assets/money. Can you help? I have about 50% equity in my home.
Claiming cost of repairs from an LAQC We have an LAQC rental property with weather tightness problems.To date we have been required to pay $40,000.00 for repairs from our own savings.Can we claim this as a loan to the company?
50:50 Partnership versus LACQ Hi, we are looking into purchasing property for rental investment. What are the other options in structuring the ownership of rental property to utilise the foreseeable first 5 years' losses in rental, besides LAQC? Is Partnership (i.e 50/50) a good alternative? Is the Government/IRD looking into use of partnership for residential property, just as what they are doing to the LAQC structure? What are the proposed changes on Partnership and LAQC for tax benefit on residential property, and when will it take effect?
Tax implications of sub-dividing your property I am planning to subdivide a property and build another house on the land in Christchurch and am trying to decipher the tax implications.
As far as I understand, I will not be required to pay tax if;(a) I keep the property for ten years before subdividing,(b) I rent the properties out for an unspecified period, or(c) I or my family live in the properties for an unspecified period.
The questions I have are:(a) Will I be liable for tax if I keep the property for ten years after subdivision? (b) What sort of periods are we talking about for the renting/family clauses?(c) If I keep one and rent it out and sell the other, will I be liable for tax or can I apportion costs to each property leaving me with a loss until I sell number two. My argument is that with rising prices and mortgage rates and extremely low yields, the only way for me to earn useful rental income is to subdivide
I am hoping the IRD will see this as intending to make rental income and assess accordingly.Does anyone have any experience with the IRD in such a situation?
Can I pay capital gains from LAQC without accruing tax liabilities? My partner and I have an LAQC which owns 3 rental properties, which are operating on a cash flow positive basis but incur losses due to depreciation.
Last year we sold a fourth property which was held in the LAQC as we received "an offer we couldn't refuse". As a result of a significant capital gain there is a high level of retained profits in the company.
While capital gains are supposedly tax free, to pay them to the shareholders would require declaration of a shareholder's salary, which would bring in to play personal income tax, ACC levies etc.
Is there any way the company can pay those retained profits to the shareholders without accruing tax liabilities. My limited knowledge from readings to date suggest the only time this can be done is to either sell all the shares of/ or liquidate the company.
Your advice would be much appreciated
Can I buy my first home and place directly into the family trust? I am contemplating investing in property and have no first home yet. Can I buy my first home and place directly into the family trust? I also plan to have a family trust as I have read that through family trust, I can protect my assets and the earlier I have a trust, the better. Will banks and other lending institutions lend to me through a family trust, even on my first home purchase? Thank you.
Tax benefits of transferring current mortgage to rental property Is there anyway we can refinance so that we can transfer the mortage on our personal home over to our rental property and still claim tax benefits. We have an LAQC and plenty of equity in the rental property to do this to the bank's satisfaction but will the IRD be happy?
Paying off mortgage on property held in LAQC We have 3 investment properties held in a laqc company. Our intention was to buy our own place of residence, but circumstances have changed and this is no longer viable for our situation. My question is that I would like to Know if there is any problems with paying of the remaining mortgage on one of the properties held under the laqc, as we have the cash available, and subsequently moving into this property for personal use, whilst keeping the others as ongoing rental investments and keeping the the one we will live in still in the company name.
I realise there will be some depreciation recovery
and that costs on the property we move into, will no longer be deductable. But is their anything else we should consider?
Transferring to LAQC, should I change ownership to my company? If I had a mortgage recently held under my own name and is attached to an investment property which Ive now decided to transfer to an LAQC would you recommend me going back to the bank and change the ownership so that the company becomes the new owner/mortgagee. The other option is to take out a new mortgage under the company and buy it off myself, but I don’t think banks will accept this especially if the LAQC is new and banks look at history, However both options maybe accepted by the banks presuming the bank will still have charge/security over the property i,e owners are still liable regardless if the company has Ltd liability status. The objective Im trying to achieve is that the LAQC is able to claim interest as a tax deduction as they are the owners/mortgagee of the property which may not have been achievable if the mortgage was still held under my own name.
Could you also advise as to what are sort of services or duties an accountant and lawyer will offer in this type of situation, really dont want a double up in work between the two cause it can be quite costly.
Cheers
Johnny
Multiple investment property loans... Hi, does buying our first property and use it as owner-occupied or strictly as rental(investment) property to the market, affects the eligibility/flexibility to get the next home loan, for next property investment in future? If it's a rental property, what is the best way to protect the asset (e.g in a Trust) as well as distributing any tax benefit/losses to the owners (as in LAQC)? Thank you!
How do I add my wife to my LAQC? I have an existing LAQC. I'd want to set up my Wife as a Director/Shareholder. The LAQC has 100 shares of $1 each. I'm currently the Sole Director/Shareholder. How do I set up a new Director/Shareholder?? We each have similiar Salaries. Do the Shares/Company have to be valued?? A mortgage adviser states having 2 directors increases our leaning ability. Which will be needed. To purchase a new Rental we need to introduce extra capital from our personal savings. What's the best way to introduce this money. As a personal loan to the LAQC? Purchase of Shareholding? How would you record this? Can I file the change of LAQC election and Shareholder changes myself.. What sort of fee would be involved ?? Any advice would be greatly appreciated..
Should I establish an LAQC? Currently, I am earning a salary of around $70,000 p.a. I am interested in getting a mortgage to buy a house for investment. As the investor, am I able to use the expenses derived from property investment to offset the income I derive from my salary? Is the law about to change on this? What are the advantages and disadvantages of establishing LAQCs if I am only able to buy one investment property at the moment. I appreciate your expert advice.
Can an overseas resident enjoy tax benefits on rental income? I am moving to Japan and will have 2 (and growing) investment properties. As I will have no (working) income in NZ, will I be able to make use with depreciation and tax benefits on the rental income from the properties. I'm not a fan of having tax credits accumulate as it's possible I may never have taxable income from a wage or salaried position in NZ again. The 2 current properties will produce an income of $650 p/w of which I will top up $155 p/w. Thank you, David.
