Irish Property? Live in Australia? TAX MTYHS
Myth #1 – You will pay more tax if you include your Irish property in your Australian Tax Return
Not necessarily is the answer and in the case of a lot of Irish people who bought houses during the boom you may actually be entitled to a refund and pay less tax now than you do currently!
The key thing here is to find out the facts about your particular property by contacting us. As with all registered tax agents we will not disclose any information relating to a client’s affairs to a third party without your permission.
The Australian Tax System is very different to the Irish/UK systems when it comes to investment properties, so if you are basing your knowledge on what you can claim or not on the Irish/UK system you are most likely paying too much Tax!
The major difference between the Irish and the Australian tax systems in relation to property is that under the Australian system you can claim for depreciation on the construction cost of your property. For example, a typical property in Ireland costs about €200,000 to build, this can be claimed as a deduction over 40 years or €5,000 per year.
At current exchange rates this could reduce your taxable income in Australia by $7,500 every year.
If you haven’t figured it out already this is largely the reason that so many people in Australia are falling over themselves to buy investment properties. This is more commonly known as negative gearing, which basically means that if you have a loss making investment that you can use that loss to reduce your taxable income. So while you may think that your property isn’t making a loss. When depreciation is taken into account you could very well be making a loss under the Australian tax system.
Contact us through our website www.ryancc.net for a free confidential estimate of what the depreciation deductions may be on your property.