Income from investments in overseas property is generally foreign source income.
Rental income
Rental and other rental-related income is the full amount of rent and associated payments you receive or become entitled to when you rent out your property, regardless of whether it is paid to you or your agent. You must include your share of the full amount of rent you earn in your tax return.
If you receive associated payments in the form of goods and services, you will need to work out their monetary value.
Your rental income includes any assessable amounts you receive relating to limited recourse debt arrangements involving your rental property.
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Reporting income from overseas property
If you have earned income from an overseas property, you must include that income in your assessable income and declare it in your Australian income tax return. If you have paid foreign tax in another country on that income, you may be entitled to an Australian foreign income tax offset, which provides relief from double taxation.
Before you calculate your net income, you must convert all your foreign income, deductions and foreign tax paid into Australian dollars.
Capital gains
As an Australian resident, you are generally taxed on any capital gains you make on your overseas property and must declare that gain in your Australian income tax return.
If the gain is taxable in Australia and you have paid foreign tax on it, you may be entitled to a foreign income tax offset.
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More information
Proposed measures
The government is continually reviewing international tax arrangements. For more information about how potential international legislative changes may affect you, refer to New legislation.
If you need help in applying this information to your own situation, contact us by phone.
Last Modified: Wednesday, 2 February 2011