Foreign owned property

Question from Jeff updated on 20th April 2012:

I am a Hong Kong resident looking to buy an apartment in New Zealand. My mortgage will be in Hong Kong and I will be renting out the property and paying for management. Do I have to pay New Zealand income tax on the rent?

Our expert Mark Withers responded:

Despite you being a non resident you must declare income derived in New Zealand on an IR3NR non resident tax return filed in New Zealand. You will be able to deduct the interest paid on the Hong Kong mortgage against the rental income though. If there is a profit tax will be payable in New Zealand. If the mortgage is secured aginst the New Zealand property there will also need to be a registration for approved issuer levy as an alternative to the non resident witholding tax regime that applies to the interest costs of foriegn borrowings.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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