Thread: AUSTRALIAN OWN VILLA - Negative Gear & Declare income

Hi,

We have just been told by our accountant that even know we delare income that we make from our villa to the Australian Taxation office that you are not allowed to Negative gear your losses ? You have to keep receipts for things like electricity , maintance, insurance & more and if we ever sell the property we can take that amount off any profit we make ? That is alot of info to keep hold of if we dont sell for 40 years. :o

Does not seem right ? Would love some advise on this topic ? :shock:

Thank you :)

Hi Sunshine.
The advice is similar to what we were told 3 years ago. To negative gear the property had to have a US$ value of 500,000 or more. What we were also told was that any expense could be accumulated as a tax off set so that any income derived from the property as long as it was less than the off set need not be declared to the tax office. Hope this helps.
Peter

Have a read through this:
http://www.ato.gov.au/large/content.asp ... /65779.htm

and go to the link on Foreign Source Income
http://www.ato.gov.au/individuals/conte ... /34783.htm

The way I understand it is:
If your expenses on the villa exceed your income on the villa (i.e. negatively geared), you make a 'foreign loss'. You can't deduct the foreign loss against your Australian source income. You can only deduct it against foreign income you make in the same category (i.e. the villa).

You don't put the foreign loss anywhere on your tax return - so you are not declaring either the income or the expenses. You have to keep all your records (including your calculation on how you got to a loss), so that in a later tax year - if you make a profit on the villa (positive gear), you can offset the prior loss(es) against that profit.

This is very similar to how it works if you have a business in Australia and it makes a loss. You can't deduct the business loss against income derived from another source - e.g. you have a business as well as a part-time job. You cant deduct the business loss against the income from the part-time job. The difference being that there is a place on the tax return to carry the loss forward.

Hope that's all clear as mud :roll: :roll:

freo

Hi,
Would love to get some advise. It seems that you own a villa in Bali. We are seriously considering purchasing a villa in Sanur. We are visiting in Sept with the intention of purchasing. We understand that this will be more of a future lifestyle thing rather than a money making venture. Any advise would be greatly appreciated.
Thanks

Originally Posted by Bert

Welcome...

What kind of advise are you looking for?

Bert, Roy, Balilife, anyone who can tell me, I would like to buy a home/villa in Bali, I have read a lot of info on this site on purchasing property in Bali..(enough to confuse me), I think i would have to go the leasehold way (no sponsor etc). Simply, I ask, Where do i begin ?

which estate agent/s would you recommend ?
How does it work in Bali, do you put in an offer, subject to ?, what is the usual
settlement time frame for purchase of property.?

Fearful of taking my first step,

Thankyou.

Or you just don't declare the Villa you own in Bali and keep the rental return in an account up there that is not linked to any Australian account.......

Cheers
Ken

For my part, it’s a pleasant irony reading a sting of posts devoted to tax scheme write offs on property that cannot be foreign owned.

Roy, my mistake, im not looking for a tax right off, i have asked my question under the incorrect heading, i was reading about property buying in bali and came into this heading to ask my question.

no, not a tax right off..........just wanting to buy a home in Bali. :oops:

Originally Posted by Roy

For my part, it’s a pleasant irony reading a sting of posts devoted to tax scheme write offs on property that cannot be foreign owned.

Haha Roy, is that a carefully worded mistake??

Yes it is a little amusing that foreigners cannot own land so I will have a little chuckle when I do my next tax return and can correctly put that I do NOT own property in Bali, I only rent for a considerable length of time :) :)
In my humble opinion I found that the 30-40 year lease to be a good thing for me as it still allows the Balinese to get the land back when i am gone and also I will have no problems down the track when the Indonesian Government realises it has put land out of the reach of Balinese by selling "Freehold" to overseas investors and decided to maybe restructure the rules....


Cheers
Ken