We have two mortgages – our family home and an investment property. Currently we redraw funds for living expenses from extra repayments made to our mortgages in the past, and make interest-only repayments.
My husband is living and working overseas at the moment, and has paid tax in that country. Will he need to declare his overseas income to the ATO for Australian tax purposes? Do you think we should sell our investment property (which is negatively geared) and invest the money elsewhere, such as in shares? As neither of us has earned income in Australia this financial year, would we pay any income tax from the capital gain if we sold the investment property?
Unless your husband is working for an overseas aid organisation, his income is taxable in Australia because the family is living here. He will receive a credit for tax paid overseas, but no refund. This means there will be no benefit from negative gearing when you are calculating your tax liability. You are the only person who can decide whether the potential of the property outweighs the benefits of selling it now.
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