Renting to Americans

[4692S]

So I'm planning my move to Australia soon (within the next six months), but I have a question on landlords and renting to Americans. I will not be working in Australia, nor will I acquire any emigrant status. I will simply live there for five or six months per year, on and off for 30-45 days at a time. My medical benefits from my US employer are world-wide coverage, so that is set as well. Yes, I will sign a yearly lease on an apt/townhouse/condo.

Does anyone have experience with landlords renting to Americans? Obviously I will be setting up a bank acct, buying a car, etc., but it never dawned on me that by having no ties to the country (with regards to emigrant status), there may be potential issues. I am keeping my US address for now, at least until I figure out the tax situation and which location (US or Aus) is more tax beneficial.

Now for the easy question...I'm looking at Perth for my new second home. Any thoughts? Sydney seems higher priced, not sure about Melbourne, so my eyes are on Perth and the surrounding area.

Thanks for the help-
Steve

[Rachel_Heath]

Hola Steve,

Whilst I can't help you on the rental question, I would like to advise you to think very carefully about how you wish to treat your taxable situation.

Wisconsin like most other states has some clearly defined rules about 'residency' and it's not as simple as just changing an address. Unless you can prove to the state that you're not coming back to Wisconsin for the foreseeable future you would still be classed as a resident of the state and therefore be required to file a WI tax return each year (publication PB122).

In addition the IRS defines your tax home as

the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

To have your tax home declared out of the country you'd need to show not only that you've taken steps to 'hibernate' your life in the US (rented out your house, placed vehicles in long term storage) but also 'opened' your life abroad (obtain foreign driving licenses, become community members etc).

You can find more information in chapter 4 of IRS publication 54.

[4692S]

Wisconsin taxes...I don't even want to go there. They are the primary reason why I'm moving (the state as a whole). My employer is in New York, I work globally, am allowed to live anywhere in the world, and even though I spend three weeks annually in WI, they consider me a full-time resident. This is mostly my fault as I have no other address to utilize. The taxes wouldn't bother me, except I see little to no services for the money I pay in. I itemize my Fed 1040, Sch A, Cap G/L, etc. saving a lot, but WI won't allow one bit of it. Sorry for the rant.

I need an address in the US for my employer's documentation, which could be FL, NV, NH, TN, TX, WA, AK, or any other income tax-free state. This is common with many colleagues who reside overseas. Since I do not intend to filing for Australian residency (at least not yet), I would need a US address anyway. My bank acct can be Australian, along with anything else "required" for everyday issues. My only tie to the US, aside from work, will be a PO Box. No vehicles, house, loans, etc. That said, I'm trying to locate a reputable international tax consultant here in the US who can inform me on Australian taxes. I've made Pub 54 a close, personal friend, and I have no doubt I can establish a permanent "status" (for IRS concerns) in Australia. Though without Permanent Resident status in Australia, I'm unsure how the IRS would view this in light of everything else established. The internet seems to only turn up help for retirees (if you move to Costa Rica there is TONS of info...), but nothing even remotely touching on this situation.

Regarding rent, I will take previous tax returns, bank statements, and letters of credit along to show landlords, given the inability to perform an Australian credit inquiry. I would think this would suffice. Again, any input is appreciated.

[Rachel_Heath]

Steve,

It sounds like you've done some serious homework here You'd be surprised how naive some folk can be though and simply assume that they can move anywhere (hence my reply) with little or no paperwork or anything else.

Good luck with your endeavors!

[Bevdeforges]

Do read very carefully the instructions for form 2555 before you invest too much in this plan. In order to claim overseas residency for IRS purposes, you must spend a full calendar year overseas - or 330 consecutive days. Even then, you are denied the overseas earned income allowance for any days spent back in the US "on business."

But in any event, 5 or 6 months a year won't break your residency for federal tax purposes. And they do ask you what sort of visa you hold for your country of residence. If Australia is like most other countries, though, you become liable for Australian taxes once you start spending at least 183 days in the country per tax year.

Rots 'o ruck, as they say!
Cheers,
Bev

[kaz101]

Hi 4692S,

I'm a landlord in Australia and I've moved from the UK to Australia.

Originally Posted by 4692S

Does anyone have experience with landlords renting to Americans?

I've no issue to renting to Americans (or any nationality for that matter).
Some landlords do have issues with pets and smokers due to damage to their property.

Originally Posted by 4692S

Obviously I will be setting up a bank acct, buying a car, etc., but it never dawned on me that by having no ties to the country (with regards to emigrant status), there may be potential issues. I am keeping my US address for now, at least until I figure out the tax situation and which location (US or Aus) is more tax beneficial.

If you check through the threads I think there's a post on what is required for renting purposes. It may not be the landlord that is the issue but the rental agency. Our agency will contact us with the possible tenants and tell us their strengths and their ability to pay. If the agents think you can't pay your details may not even be passed to the landlord. So check what is required for renting out a place and take it from there.....

Originally Posted by 4692S

Now for the easy question...I'm looking at Perth for my new second home. Any thoughts? Sydney seems higher priced, not sure about Melbourne, so my eyes are on Perth and the surrounding area.

I've only ever visited Perth and it was too hot for me. Regularly over 40 degrees C in the summer. I also felt it was a little remote from the rest of Australia since air fares are not cheap here (compared with Europe). However with new airlines moving in that may be about to change in the next 6 - 9 months.

Perth prices have also risen dramatically in the last few years because of the developments and investors in the area.

Regards,
Karen

[Tiffani]

HI, I'm American who recently moved to Melbourne and I had no trouble finding a place. When I found the house I wanted, I decided to write a quick note to go along with my application explaining the situation I was in. I also made sure to include the email addresses of any references (if you can get a letter in advance, even better) so that the letting agent could follow up without having to call internationally. I saw the house on a Thursday afternoon, submitted the application Friday afternoon, and got a call on Saturday saying I was approved for the place.

Technically it should be discrimination to refuse to rent based on nationality, but the letting agent/landlord may want to see proof of your lawful status in australia and how long you're able to stay here.

[dvasey]

My children, who are dual US-Australia citizens, but sound American, have had no more trouble than anyone else has in Melbourne or Bairnsdale, Victoria. My son did encounter a little opposition in Newcastle a few years back.

House prices in Perth and Sydney rose very rapidly over the past few years and are now dropping. Melbourne is fairly high and a bit more stable. Inner suburbs tend to be very pricey, especially if they are within sniffing distance of the ocean.

Originally Posted by 4692S

So I'm planning my move to Australia soon (within the next six months), but I have a question on landlords and renting to Americans. I will not be working in Australia, nor will I acquire any emigrant status. I will simply live there for five or six months per year, on and off for 30-45 days at a time. My medical benefits from my US employer are world-wide coverage, so that is set as well. Yes, I will sign a yearly lease on an apt/townhouse/condo.

Does anyone have experience with landlords renting to Americans? Obviously I will be setting up a bank acct, buying a car, etc., but it never dawned on me that by having no ties to the country (with regards to emigrant status), there may be potential issues. I am keeping my US address for now, at least until I figure out the tax situation and which location (US or Aus) is more tax beneficial.

Now for the easy question...I'm looking at Perth for my new second home. Any thoughts? Sydney seems higher priced, not sure about Melbourne, so my eyes are on Perth and the surrounding area.

Thanks for the help-
Steve