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As an Australian permanent resident, do I need to declare inherited property from overseas in Australia?

As an Australian permanent resident, you generally need to declare inherited property from overseas in Australia, especially if there is rental income or any other income derived from that property. Here are some key points to consider:

  1. Residency Status

    If you are a permanent resident of Australia, you are considered a resident for tax purposes. Australian residents are taxed on their worldwide income, which includes income from overseas property.
  2. Rental Income

    If you inherit property overseas and receive rental income from it, you are required to declare this rental income on your Australian tax return. The income should be reported in Australian dollars based on the exchange rate at the time the income was earned.
  3. Capital Gains

    If you sell the inherited property overseas and realize a capital gain, you may also have Australian tax obligations on the capital gain. Australia has rules for calculating capital gains tax on foreign assets, and there are provisions to reduce or eliminate double taxation through tax treaties.
  4. Foreign Tax Credits

    You may be eligible for foreign income tax offsets or credits for any tax paid overseas on the inherited property income. This helps prevent double taxation.
  5. Reporting Requirements

    It's important to keep records of the inheritance and any income derived from the inherited property. When filing your Australian tax return, you should accurately report all relevant income and gains from overseas assets to comply with Australian tax laws.

If you have inherited property from overseas and are unsure about how to report it or any tax implications, consulting with a registered tax agent or the Australian Taxation Office (ATO) can provide tailored advice based on your specific circumstances.

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Law Firm's Insights
9 September 2022
Queensland
Marino Law
CROWLEY
Highlights
The text is about a 83-year-old woman, Ms Hind Issa, who has Alzheimer's dementia and does not speak English. Her adult daughter, Ms Jennifer Halik, acts as her litigation guardian in these proceedings. Ms Issa and her former husband, Mr Ziad Karbotli, immigrated to Australia from Lebanon in the 1960s. They worked hard to provide for themselves and their three children: James (the Plaintiff), Jennifer (the daughter of the Plaintiff) and Jumanah (the daughter of the Plaintiff's second husband). In 2006, Ms Issa and her husband divorced. As part of the matrimonial property adjustment, Ms Issa became the sole registered proprietor of the two residential properties: 42 Barak Street in Bulleen, Victoria (the family home) and 30 Francis Street in Mermaid Waters, Queensland (their home when they moved to Queensland). After the divorce, Ms Issa continued to live at 30 Francis Street with her son James. Ms Issa's apparent signing of the relevant Mortgage and associated documentation was purportedly witnessed by Mr Stephen Picken, a former solicitor. Mr Picken has since admitted that he did not witness Ms Issa sign any of the documents. He subsequently pleaded guilty to a charge of making false declarations and received a suspended sentence of imprisonment. Ms Issa alleges that her son James Karbotli perpetrated the fraud by forging her signatures and mortgaging her property without her knowledge, permission or approval. By the time Ms Issa apparently became aware of the allegedly fraudulent Mortgage, Mazop had already defaulted on repayment of the loan and lenders were in the process of taking action to enforce their supposed rights as mortgagees. The property was sold to the Eighth and Ninth Defendants, Mr Jess Morecroft and Ms Jacqueline Morecroft (née Haines), who subsequently entered into a contract of sale with the Mortgagees (the "Purchase Contract").
Judgment
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