We were recently instructed to undertake a valuation of a property in Sydney for the purpose of US tax reporting. We are often instructed to value properties in NSW for tax purposes, but rarely for US tax purposes. When this instruction arrived, we ‘raised an eyebrow’, and asked some questions.
After a little bit of searching around, we were shocked to learn that Australian citizens living in Australia, who also hold US citizenship, have an obligation to report all Australian assets to the IRS in the USA, so that US tax can be paid on your Australian earnings.
After searching online, we found dozens of stories of retirees living on their superannuation, who were suddenly hit with large tax bills from the IRS for not reporting their Australian assets.
While the tax relationship between the USA and Australia is complex and needs to be interpreted by each individual for their own situation, it is apparent that if you are a dual citizen of Australia and the USA, living in Australia, you might be in the ‘crosshairs’. And, the US tax treatment of your Australian assets can be punitive.
So, there you go, the IRS is everywhere, and in Australia, they have asset valuation requirements for real property assets. So, if you are an Australian with a US passport, do some online searching about your responsibilities for reporting to the IRS, because otherwise, you could be in for a nasty surprise.