{"id":20143,"date":"2018-02-27T01:00:33","date_gmt":"2018-02-26T14:00:33","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=20143"},"modified":"2018-02-27T01:00:33","modified_gmt":"2018-02-26T14:00:33","slug":"when-tax-attacks","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/when-tax-attacks\/","title":{"rendered":"When Tax Attacks"},"content":{"rendered":"

AT A GLANCE<\/strong>
\nYears investing: 31
\nCurrent number of properties: 6
\nPortfolio value: $2.28m
\n\"\"
\nJohn Chandler has spent most of his life surviving on \u00a0a low income, with a limited social network.
\n\u201cI spent half my working life in the hills, bush shooting and hunting deer for the New Zealand Forest Service \u2013 I was pretty much a hermit!\u201d he says.
\nWhen he made the transition into the hospitality industry, his financial prospects did not improve much, as his salary was barely above the minimum wage. As a result, property became a way for him to strengthen his financial standing.
\nIn 1986, he made his first investment in his native New Zealand when he bought a house and land package in Waikato, making a tremendous profit.
\n\u201cThe property was bought for NZ$65,000, and I still own this property today; it\u2019s valued at NZ$370,000,\u201d he says.
\nBolstered by his success, John bought his second property in Waikato \u2013 again a house and land \u2013 in 1994, for NZ$89,000. Today this home is worth
\nNZ$360,000. In that same year he picked up another property in the South Island for a very low NZ$45,000 \u2013 this home is presently valued at NZ$140,000. Almost a decade later, John decided to extend his portfolio to Australia.
\n\u201cIn 2001, I paid for my parents to go on holiday to Queensland, and while there I gave them a budget for a house and land in Brisbane. I ended up with my first Australian property \u2013 a Villa World house in Wynnum West.\u201d
\nHe paid a deposit of $30,000 for the $170,900 home, and while he did have financing problems at the start, he soon settled his first international purchase. This property has since gone up in value by nearly $350,000. Despite doing minimal research on the market, he went on to purchase two more house and land packages in Griffin (Moreton Bay region) and Oxenford (on the Gold Coast) in 2003 and 2005, respectively.
\nJohn believed strongly in Queensland\u2019s potential, and this trust has not let him down thus far, with both properties growing in value by a combined total of over $350,000.
\n\"\"
\nTawa property in Welington, New Zealand
\nTax troubles<\/strong>
\nFor many years, John\u2019s investments have ticked\u00a0along. He\u2019s now retired and his investments provide him with a rental income to supplement his meagre pension, which is currently about NZ$200 per week.
\nAs a foreign investor in Australia, however, John recently found himself saddled with significant tax burdens.
\n\u201cI had not really allowed for the dreaded land tax. This had steadily climbed, but not to the point where I couldn\u2019t handle it,\u201d he explains.
\n\u201cThe financial crisis certainly helped [keep land values constrained], but with the Queensland government deciding to slug absentee owners, I have just been presented with a horrendous land tax bill of nearly double last year\u2019s. The bill is
\n$17,696, taking me from a slightly positive position to a grossly negative one.\u201d
\nThis was a huge blow to John, as he had only recently been released from his job.
\n\u201cAfter nearly 30 years I was kicked out of work due to developing multiple sclerosis, and I have been stressing quite a lot about cash flow,\u201d he says.
\n\u201cI now survive on a NZ$200 a week [disability] pension, plus a little positive cash flow on my New Zealand properties.\u201d
\nJohn\u2019s low wages left him with little financial leeway \u2013 and as a result he has had to consider selling one of his properties in order to manage his property obligations.
\n\u201cI could muddle through \u00a0using debt to pay this onerous surcharge, but I would end up another $40,000\u2013$50,000 in debt. Overall, is it worth all the heartache?\u201d<\/p>\n

JOHN\u2019S TIPS FOR INTERNATIONAL INVESTORS<\/strong>
\n1. Check out state websites
\nIf you own property in Australia and you are not a resident, go to the relevant state website and search for your land tax obligations as an absentee or foreign owner.2. Take advantage of instalment plans
\nKnow that you can usually pay your land tax obligations in three instalments to assist with managing this huge expense.3. Spread out
\nBuy only one property in each state and not all in one state \u2013 this way, you might be able to limit the burden of taxes levied by one state government.\n<\/div>\n

\"\"
\n\"\"
\n\"\"
\nThough he\u2019s pleased at how well his properties have performed, this sudden change of policy has left John with regrets about buying in Australia.
\nTo make matters worse, in addition to the taxes that have been siphoning the cash flow from his investments, John is also handling a major termite infestation in one of his Queensland properties. Termites are among the worst nightmares for property owners, since the cost of damage repairs can reach into the high thousands, and then some.
\n\u201cI wish that I had bought more property in earlier years and in my own backyard in\u00a0New Zealand,\u201d John admits.
\n\u201cIn New Zealand there is no land tax, no stamp duty, no capital gains tax to speak of \u2013 and no termites!\u201d
\nLooking forward<\/strong>
\nIn light of his problems, being single has been both a boon and a bane for John. It helps that he doesn\u2019t have a family, except for his beloved dog Ellie, to look after and strain his finances further, even if he does feel that couples who bring home two incomes could more easily deal with his situation.
\n\u201cIt is just me at the end of the day,\u201d he says.
\nIf he were enticed to buy in Australia again, John believes he would change up his strategy to invest in other states rather than sticking to just one, limiting the chances of going into the red because of the heavy taxes levied by the state government.<\/p>\n

\u201cWith the Queensland government deciding to slug absentee owners, I have just been presented with a horrendous land tax bill of nearly double last year\u2019s\u201d<\/em><\/h2>\n

\u201c[I\u2019d] probably buy a couple of lower land content,\u201d he adds.
\nHe would also look to get more advice from others, rather than doing things completely on his own, and he would research more deeply into the tax implications as presented on state government websites so that he knows what to expect in the future.
\n\"\"
\nAs well as dealing with land tax expenses, John now has to find the funds to pay for termite repairs
\nJohn\u2019s portfolio is worth over $2m, and taking his debt into consideration, his equity is still worth over $1m. Hence, it will be important that he sells wisely in order to make the most of his portfolio\u2019s position.
\nJohn\u2019s portfolio is worth over $2m, and taking his debt into consideration, his equity is still worth over $1m. Hence, it will be important that he sells wisely in order to make the most of his portfolio\u2019s position.
\nJohn\u2019s portfolio is worth over $2m, and taking his debt into consideration, his equity is still worth over $1m. Hence, it will be important that he sells wisely in order to make the most of his portfolio\u2019s position.
\nJohn confesses, \u201cI was hoping to get to age 65 before having to sell. I cannot help but feel that it has been a bit of a lost opportunity, but overall I have done OK.\u201d
\nOriginally published as: https:\/\/www.yourinvestmentpropertymag.com.au\/success-stories\/when-tax-attacks-245343.aspx<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

AT A GLANCE Years investing: 31 Current number of properties: 6 Portfolio value: $2.28m John Chandler has spent most of his life surviving on \u00a0a low income, with a limited social network. \u201cI spent half my working life in the hills, bush shooting and hunting…<\/p>\n","protected":false},"author":176692471,"featured_media":20148,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,25,31],"tags":[70],"class_list":["post-20143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story","category-sponsored-channels","category-your-investment-property","tag-featured"],"yoast_head":"\nWhen Tax Attacks - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/when-tax-attacks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When Tax Attacks - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"AT A GLANCE Years investing: 31 Current number of properties: 6 Portfolio value: $2.28m John Chandler has spent most of his life surviving on \u00a0a low income, with a limited social network. \u201cI spent half my working life in the hills, bush shooting and hunting...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/when-tax-attacks\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2018-02-26T14:00:33+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"When Tax Attacks\",\"datePublished\":\"2018-02-26T14:00:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/\"},\"wordCount\":1211,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"keywords\":[\"Featured\"],\"articleSection\":[\"Latest Stories\",\"Sponsored Channels\",\"Your Investment Property\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/when-tax-attacks\\\/\",\"name\":\"When Tax Attacks - 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