How to structure your assets from overseas

Question from Chris Berry updated on 21st November 2007:

I am English and have recently married a Kiwi. We are currently resident (and tax resident) in England, although at some point in the future we do intend to return to NZ. We are in the process of buying our first investment property in NZ, and were wondering how best to set it up for tax reasons. In my wifes name as she has the greatest income, or in my name, or joint names? It would only be a $200,000 investment.

Our expert responded:

Any losses incurred on property in New Zealand can only be offset against NZ income. On that basis, your personal incomes from your UK jobs are irrelevant. If a company or LAQC (LOss Attributing Qualifying Company) is used (bearing in mind that the loss from the LAQC can only be offset against NZ income), company legislation in NZ requires that any company 25% or more owned by an overseas tax resident must be audited, so while it is possible, you will be paying for an additional compliance cost that will have little value for you. The lossess would be carried forward within the company to be offset against future profits. A trust, on the other hand, does not carry the same burden. Like a company, the losses must be carried forward and offset against future profits and as you can't use the losses anyway, there is no disadvantage here. Really, in your situation, you need to take advice from an accountant or structuring specialist to ensure that whatever you do, you set it up to serve your long term requirements in the best way.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.



 



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