If you are a foreign resident and you earn rent from an Australian property:
- You should lodge a tax return each year and include your “net rental income”, that is, rental income minus rental deductions. Deductions include loan interest, holding costs, estate agent’s fees and repairs.
- The financial year in Australia ends on June 30
- If the property is less than 20 years old it could be worth getting a tax depreciation report. This report outlines how much you can write off for the decline in value of the building and the assets inside it. Not all properties can benefit from depreciation deductions.
- Your income in Australia is subject to tax at a rate of 32.5% (foreign resident tax rate). This rate gets higher if you earn over $87,000.
- If you sell the property and make a capital gain – that is, the sale price exceeds the purchase price – then the profit is taxable.
- If you sell a property in Australia for more than $750,000 you are taxed at the time of sale but you can get a refund of some or all of the tax by lodging a tax return.