Investing overseas has become a hot market for prospective investors.

The tax implications for such an investment are remarkably straightforward to understand.

The rent received from an overseas property is treated the same way as an Australian property; however, it is classified as a “Foreign Income”. The foreign tax already paid by the investor on the income from such an investment is treated as a “Foreign Income Tax offset”.
The deductions against the income from overseas property that can be claimed are similar to the deductions that can be claimed on an Australian property i.e. (rates, interest, insurance and depreciation).
Also, if the investor incurs a foreign income loss on the overseas investment, then that loss can be offset against any other Australian income earned.

If you sell the overseas property, then you may be liable for a Capital Gains Tax (CGT). The ATO mandates the inclusion of the gain or loss derived from the overseas property in the tax return.
A “Foreign Income Tax offset” can be claimed if the tax has already been paid overseas on the sale.
Alternatively, the foreign income loss can be offset against the capital gains you make on any other assets in Australia.

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