Losses on overseas rental

Question from Rosanne updated on 5th April 2012:

We have just moved home to New Zealand after five years overseas. We own a house in Ireland and one here with both rented out. If we are now resident in New Zealand for tax purposes then can we claim losses on our house in Ireland against our house here as it is now making a gain?

Our expert Mark Withers responded:

If you had been away 10 years you would qualify for a four year exemption from declaring foreign income. Having been away five the foreign rent is assessable and if a loss is made it is deductible. If you pay interest on a foreign loan you should consider registering for approved issuer levy which is a cheaper alternative to paying non resident withholding tax on the foreign debt. Foreign exchange fluctuations on the debt can also impact the tax position. Seek advice from a chartered accountant

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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