• NZ International Tax & Property Advisors Team

Tax issues for holding an overseas rental property

Many taxpayers aren't aware of the tax issues when they decide to purchase an overseas rental property or migrate to NZ holding an overseas investment property. Understanding the tax issues involved help taxpayers understand their tax risk exposures and make informed decisions.

In this video, Connie Lui covers some tax issues a taxpayer may face when holding an overseas rental property. If you need further assistance with tax, accounting or property matters, we offer a FREE 30-minute consultation. You can book here: https://www.nztaxprop.co.nz/bookings-checkout/free-30min-consultation

In summary, the tax issues for holding an overseas rental property are as follows.

Returning foreign rental income if taxpayer is a NZ tax resident. If NZ has Double Tax Agreement with the relevant country, this may have an impact on the outcome.

Deduction for expense in relation to overseas rental income can be claimed.

• Taxpayer can elect to return foreign income in NZ tax year in which overseas balance date fall.

Ring fencing of tax losses still applies to overseas residential properties.

Foreign denominated loans – Unrealised foreign exchange gains and losses may need to be returned in particular if you are not a cash basis person.

Interest payments to foreign bank – May have non-resident withholding tax obligations but exclusion may apply. If non-resident withholding tax applies, can explore whether approved issuer levy applies.

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