Owning Property in Australia as a Foreign Resident

“Know what you own, and know why you own it” ― Peter Lynch

3 min read

Owning Property in Australia as a Foreign Resident

“Know what you own, and know why you own it” ― Peter Lynch

3 min read

Owning property in Australia as a foreign resident can be a complex but rewarding venture. It requires careful planning and consideration of various factors. Whether you are an expatriate who intends to eventually return to Australia or a non-resident investor, there are certain tax implications, and financial aspects involved of which it is important to be aware.

A Great Investment Opportunity?

Property ownership in Australia can be a lucrative long-term investment. The Australian real estate market has demonstrated consistent growth over the years, and for many expats, renting out their Australian property can serve as an invaluable source of income. With property also comes the ability to have a home base for any return or lengthy stay in Australia, which ensures a smoother transition upon any future relocation.

One of the most notable incentives for property investments in Australia is the potential for a reduction in tax on any capital gain made upon the sale of the property. However, the rules on this can be complex and it is important to note that you generally only benefit from such a tax concession should you resume tax residency or become tax resident in Australia.

Nevertheless, due to these incentives (and others), investing in the Australian property market to benefit from potential tax savings and long-term growth is an attractive option for many.

When considering either Australian property as an investment decision or selling your existing property, it is recommended to seek professional advice to ensure the process is as seamless as possible.

Navigating Challenges

As with all forms of investing, property does not come without its own unique risks and challenges. Though not exclusive to the Australian property market, the lack of liquidity present compared to other styles of investing needs to be carefully considered.

In addition, perhaps more specific to the Australian property owners amongst you, the challenge of simply operating on a vastly different time zone when dealing with maintenance and management of property poses potentially significant issues in the worst of cases. Day-to-day, this will likely be a small issue, but it is definitely worth keeping in mind.

To that end, being in another Country does not just invite time zone complications. Whilst Australia uses the Australian Dollar (AUD), Switzerland uses the Swiss Franc (CHF), the United Kingdom uses the Pound Sterling (GBP), the United States uses the US Dollar (USD) and so on. What this really means is that there is an ever-present currency risk that has the potential to seriously impact your returns when converting income earned in AUD to that of CHF or other relevant currency. Exchanges rates constantly fluctuate and so be sure to check the latest exchange rate(s) available to you with the institution you wish to exchange with.

Returning to Australia?

If you plan to return to Australia now or in the future, consider whether holding onto your property until you become an Australian tax resident would be suitable. In doing so, you could minimise unnecessary tax charges.

It is essential to ensure that your property holdings align with your future requirements upon your return. Whether leveraging the property for rental income, capitalising on long-term capital gains, or even your family’s evolving needs, making a property selection that aligns with your long-term goals is crucial for a smooth relocation. Effective financial planning now (before you arrive in Australia) can yield substantial benefits down the road. You’ll thank yourself for starting planning early!

Remaining Overseas?

For those with no plans to return to Australia, the approach to property ownership and tax management may differ and require a more considered approach. Should you hold onto your existing property? Should you sell? How long will you stay overseas? Could your funds be more efficiently invested elsewhere? All these are questions to consider (as well as many more!) to ensure that your property portfolio aligns with your broader investment goals.

For long-term financial success, it is crucial to think about whether your properties will be beneficial over the long-term, or not. In addition, the laws and regulations in place today are always open to change in the future and any changes may negatively (or, equally, positively) impact your decisions. Explore tax strategies available to you and how you can make the most of your Australian property whilst overseas.

Blueprint for Success

Owning property in Australia whilst overseas presents an exciting opportunity for wealth accumulation and the reassurance of a future home base. Yet, this journey is not without challenges, including management complexities, foreign exchange risks, and tax implications, notably for non-resident investors. Whilst it certainly offers its own advantages, real estate should be viewed as a component of a comprehensive strategy to diversify your investments and safeguard your financial wellbeing.

To walk this path with confidence, Patterson Mills are here to light the way. You don’t have to try and figure it all out on your own, get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting and we will guide you every step of the way. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all information within this article has been prepared for informational purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

What to Do When Money Finds You

“If we command our wealth, we shall be rich and free; if our wealth commands us, we are poor indeed” — Edmund Burke

3 min read

What to Do When Money Finds You

“If we command our wealth, we shall be rich and free; if our wealth commands us, we are poor indeed” — Edmund Burke

3 min read

Life sometimes surprises us with unexpected wealth. Whether you’ve received an inheritance, won the lottery, sold a property, or even received a substantial bonus at work, managing sudden wealth requires careful consideration. Here’s a practical guide to help you navigate these turn of events.

Pause and Breathe

First, take a deep breath. Sudden wealth can be overwhelming, and rash decisions may lead to regrets later. Give yourself time to absorb the news and adjust to the idea of having more money than before.

As you pause, it’s essential to understand that this isn’t just about money; it’s a significant change in your life. Consider how this newfound wealth might impact your daily routine, your relationships, and your long-term goals. Reflect on what truly matters to you and what you want to achieve.

Seek Professional Advice

Consider consulting with Financial Advisers and estate planners. They can provide insights on how to minimise tax implications, invest wisely, and create a long-term financial plan.

Professional advice is invaluable, especially when dealing with substantial sums of money. Your Financial Adviser can help you make informed decisions based on your unique circumstances and goals. They can guide you in optimising your investments, managing risks, and preserving wealth for generations to come.

Pay Off Debts

If you have outstanding debts, such as credit card balances or loans, consider using some of your newfound wealth to clear them. Reducing high-interest debts can free up more money for your financial goals.

Debt repayment might not be the most exciting use of your newfound wealth, but it’s a financially responsible move. Eliminating debts can bring you peace of mind and help you redirect your financial resources towards more meaningful objectives. Plus, it can improve your credit score, which may benefit you in the future.

Emergency Fund

Ensure you have an adequate emergency fund. This safety net provides financial security during unexpected events and can prevent you from dipping into your newfound wealth for unexpected expenses.

An emergency fund is a cornerstone of financial stability. It ensures that you’re prepared for life’s curveballs without derailing your long-term financial plans. Aim to have at least three to six months’ worth of living expenses set aside in a high-yield savings account.

Diversify Investments

Avoid putting all your money into a single investment or asset class. Diversifying your investments can help manage risk and provide a more stable financial future.

Diversification is a fundamental principle of investment strategy. By spreading your investments across various asset classes, such as stocks, bonds, real estate, and alternative investments, you can reduce the impact of a poor-performing asset on your overall portfolio. Consult with your Financial Adviser to create a diversified investment portfolio tailored to your risk tolerance and goals.

Create a Financial Plan

Work with professional Advisers, such as Patterson Mills, to develop a comprehensive financial plan that aligns with your long-term goals. This plan should account for your retirement, children’s education, and any other financial aspirations.

A well-structured financial plan acts as a roadmap to your financial future. It outlines your financial goals, investment strategies, and savings targets. Regularly review and adjust your plan to accommodate changes in your life, financial situation, and goals.

Budget Wisely

Even with newfound wealth, budgeting remains crucial. Develop a realistic spending plan that ensures you’re living within your means and not overspending.

A budget helps you manage your finances efficiently and avoid unnecessary expenditures. It can also help you strike a balance between enjoying your newfound wealth and saving for the future. Consider working with a Financial Adviser to create a budget that aligns with your financial goals and lifestyle.

Enjoy but Don't Splurge

Whilst it’s tempting to splurge on luxuries, consider balancing enjoyment with prudent financial decisions. Prioritise your long-term financial security alongside immediate gratification.

Enjoying your newfound wealth is natural, but moderation is key. Set aside a portion for indulgences, but also allocate funds towards your financial goals. By striking a balance between enjoying the present and securing your future, you can make the most of your sudden wealth without jeopardising your financial well-being.

Your Path to Financial Prosperity

Your sudden influx of wealth, whether through inheritance, a lottery win, property sale or any other method, can be both exhilarating and daunting. It presents a unique opportunity to make smart financial decisions that can impact your life for the better. By following these steps and seeking professional advice from Patterson Mills, you can navigate the twists and turns of newfound prosperity with confidence.

Remember, wealth is a tool to help you achieve your goals and lead the life you desire. Embrace this financial gain, but do so with careful consideration and a well-thought-out plan.

Get in touch with us today and book your initial, no-cost and no-obligation meeting. Just send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.