Sydney, Australia to Chicagoland (?) (homes, purchasing, vs)

[kitty_nina1]

Originally Posted by eb23

Thanks for your perspective. Obviously I got a year to validate my assumptions and who knows, renting a smaller place I might discover I like those more.. Currently I live in a 5005 sqft -- kids being able to ride scooters or bikes downstairs is a huge bonus when it is that muggy hot plus the bloody smoke smothering us since September. Property taxes are a ***** indeed. This makes a huge aspect of my consideration, not to mention not willing to live in a place older than my long time ago deceased grand-grand parents.

By the way -- is my idea about looking to buy early spring (when the snow is almost gone but it is still cold) makes sense since it should help to uncover any issues be it leaks, bad insulation etc?

Commute wise -- nothing will change to my current routine being 20 minutes in car + 60 minutes on a train one way. Luckily in Australia and the US we have plenty flexibility and working from home arrangements that I hope won't exhaust me much.

Diversity is an interesting topic. In Sydney, the most culturally diverse places aren't the most desirable nor affluent places not to mention the crime rate etc. Washington is a great place indeed, albeit I do not work for Amazon, MS or Boeing. I was specifically advised on either IL or NJ.

This is naive at best. I have doubts as to whether the OP is even serious.

[kitty_nina1]

Originally Posted by damba

Good grief you have made a lot of assumptions about the OP’s situation. The moral part about what commute length is considered appropriate is certainly a fun read LOL

The OP has done his homework, contrary to what you think. Are you aware what the median home costs are in Sydney(?)

No. The OP has not done his homework.
The person of his caliber should have consulted not only a tax specialist as the previous user has suggested, but a relocation specialist.

I found the idea of buying a 1.1M house so the kids could ride bikes downstairs laughable. I also laughed at the idea that OP is going to be working from home because employers in US are so flexible and looking to make arrangements with their employees. Reading books during a long commute will become less of an excitement with time. The OP is in his 40s, but judging by how he writes I'd say his psychological maturity is on par with that of a teenager.

[eb23]

Originally Posted by wjj

Just one word of warning here given that there is a potential large gain in the sale of the house in Australia. The US taxes its residents (not just its citizens) on a worldwide basis. The only major country in the world to do so. Pretty much every other country taxes on a residence basis. Once you become a resident for US income tax purposes (which could be the day you arrive or even retroactive to the beginning of the year if certain elections are made), your worldwide income is subject to US and usually, state taxation. Foreign exchange rate changes between the home purchase and sale can cause surprising results if it is sold during a period of US residency. There also is a bilateral income tax treaty between the US and Australia that can supersede normal domestic tax provisions in both countries that may or may not help.


The best advice anyone can give you before doing anything else, is to seek a US tax advisor who is well versed in US taxation of foreign nationals. Outside of the big firms, there are not many such advisors around. If you are working for a major company in the US, they likely have competent advisors who handle things like this but be sure that you are protected through a robust tax equalization agreement. And plan for the time if/when you leave the US too. To demonstrate how crazy the US tax system is, look at the case of Boris Johnson, UK Prime Minister. He was born in the US so is a US citizen. He left the US for good as a young child - 5 years old, but once a citizen, always a citizen. When he sold his house in the UK a few years ago, the IRS nailed him for US income taxes on the gain from the UK sale (even though the gain was exempt in the UK). He has since renounced his US citizenship. The US tax system is like nothing you have ever experienced regardless of where else you have lived in the world. Lawful permanent residents (i.e., green card holders) can be chased down like poor Boris in some circumstances. Professional tax advice from someone with special expertise in the area is a must.

Thank you for your insight! I was aware of many aspects of the US taxation, except poor Boris story. That's the reason I am keen to sell stuff BEFORE I make a move -- my investment house is on the market as of this week.

The only asset I plan to leave behind is my superannuation -- has to be in Oz until I reach the preservation age. Hopefully it won't be taxed since all the taxes have been already paid but yeah, that's a story of a few decades forward.

[wjj]

Originally Posted by eb23

The only asset I plan to leave behind is my superannuation -- has to be in Oz until I reach the preservation age. Hopefully it won't be taxed since all the taxes have been already paid but yeah, that's a story of a few decades forward.

A foreign pension is not a qualified pension for US tax purposes, so yes, it could be taxable in the US as if it were just a simple investment account. Hopefully you are fully vested, because vesting during US residency can be a shock. PLEASE SECURE COMPETENT TAX ADVICE IN THE US BEFORE MAKING A MOVE. Foreign pensions are always an issue in the US for inpatriates.

[damba]

Originally Posted by wjj

A foreign pension is not a qualified pension for US tax purposes, so yes, it could be taxable in the US as if it were just a simple investment account. Hopefully you are fully vested, because vesting during US residency can be a shock. PLEASE SECURE COMPETENT TAX ADVICE IN THE US BEFORE MAKING A MOVE. Foreign pensions are always an issue in the US for inpatriates.

I agree. The complicated ‘tiebreaker’ rules (related to tax treaties) may require the OP to seek additional advice.

That said, he’s presumably not taking any distributions (RMDs, etc.) *now* since he’s a high earner at least 20+ yrs from the age where you would typically start drawing from a retirement account. In this regard he has other fish to fry first

Cheers

[wjj]

Originally Posted by damba

I agree. The complicated ‘tiebreaker’ rules (related to tax treaties) may require the OP to seek additional advice.

That said, he’s presumably not taking any distributions (RMDs, etc.) *now* since he’s a high earner at least 20+ yrs from the age where you would typically start drawing from a retirement account. In this regard he has other fish to fry first

Cheers

Not true. The treaty tie breaker rules would likely not come into play if he is moving here for a long period of time. They only apply when someone is considered to be a resident of both countries at the same time, which is very unlikely in this fact pattern.


Further, if the Australia retirement arrangement is not considered to be a qualified plan for US purposes (which it likely will not be), distributions are not the only issue (those are covered in the treaty). The normal US rules could tax the annual increase in vested benefits in a pension or for a defined contribution plan like a 401(k) or IRA-type plan, could treat it like any normal investment account where interest, dividends, capital gains, etc. would be taxable each year. There are strategies that can be used to lessen this issue, but generally, they need to be put in place before getting to the US. Some of those strategies might be unappealing to the inpat. The treaty and protocol may provide some relief, but it has to be claimed.


Again. A very complicated area and a tax advisor with expertise in the area, including tax treaties, should be consulted BEFORE coming to the US. The Big 4 accounting firms all have very capable expat/inpat practices and hopefully, the employer is using one of them.

[Hiruko]

5k square feet is a massive house for Sydney. Do you live in a $20 million home?

[damba]

Originally Posted by Hiruko

5k square feet is a massive house for Sydney. Do you live in a $20 million home?

He stated he lives in a home previously owned by a family member, one hour commute. Similar to Chicago, housing prices will vary.

Cheers

[eb23]

Thanks wjj, damba.

Definitely a point to discuss with an advisor, once I got one, that will come as a part of a relo package. Full disclosure is a must and whatever the Law says is what it is going to be regardless. Based on some preliminary research, there is some uncertainty on how the IRS treats Australian Super meaning different treatment regimes might apply depending on the structure of the fund itself.

As an L1 non-resident visa holder, I believe initially, until I satisfy the criteria of the “significant residence test”, only the US-derived income will be subject to the USA tax. Obviously subject to an adviser’s opinion and not necessarily a point to discuss on a forum considering relatively low numbers of aussies making a move on a dual-intent L1 vs work-only E3 visa and lack of well researched body of knowledge.

The discussion in this thread has digressed a bit from validating some location-specific questions where I tried to ascertain the suitability of Chicagoland to my specific needs and means, towards financial matters with elements of physcoanalysis and profiling from aspiring know-it-all followers of Sigmund Freud. That has been quite useful nevertheless.

Chicago has ticked all the boxes and this is where my role is being created, which was still an open question up until a few weeks ago. I probably did not mention nor it was much relevant considering the initial intent of my question - I had plenty locations to decide on aligning my personal preferences and the need of my employer.

[eb23]

Originally Posted by damba

He stated he lives in a home previously owned by a family member, one hour commute. Similar to Chicago, housing prices will vary.

Cheers

Nope, I didn’t. I stated I built my house 10 years ago, that was the most financially viable option for me considering no stamp duty on newly constructed homes, when you build vs purchasing off the plan

Hiruko
20 million will be not necessarily 5000sqft house but something nice at the heart of historical places such as Milsons Point, North Sydney, Mosman etc. 20m will likely get you water views/access and plenty of good stuff. I live in Sydney’s West, Parramatta area. Similarly to what I read here, there is a bit of family oriented, dense West vs established, expensive and awesome North.

The market has been good, my current value is 1.7m. 20 million... I wish.