On the beach, yes, but it’s a bit of a haul

Some people dream of spending their disposable income and time playing the legendary golf courses of Britain. Others cycle a few of the picturesque stages of the Tour de France. But I’m still a beach guy, and I jumped at the chance to escort my third child Down Under for a semester of college instruction.

Australian beaches are legendary, and I thought somewhat affordable, until I arrived in this terrific seaside community about an hour’s drive north of Brisbane on the Sunshine Coast. We were told this was where those in the know from Sydney and Melbourne came to vacation, leaving the more popular Gold Coast south of Brisbane to the international jet-setters.

Big-city people have definitely found this place -- and the beach communities north of here -- driving prices to nearly $600,000 U.S. for a nice three-bedroom home on a decent lot within walking distance of the sand.

And the sand is a seller. Fine, white and clean and leading to year-round warm water and marvelous waves. Why is the water so pleasant? The area is truly in the tropics.

Mooloolaba is as far north of the Tropic of Capricorn as the Big Island of Hawaii is south of the Tropic of Cancer. Pitcairn Island, made famous by the late Marlon Brando’s exploits, is approximately on the same latitude as the Sunshine Coast.

Beach communities and view property values have outperformed just about every other sector of Australian housing this year, according to the Real Estate Institute of Australia.

For example, home values in Sydney jumped 16% in 2002 and 23% in 2003, while tailing off significantly the last two years. The appreciation last year was the slowest pace since 1996, according to the Australia Bureau of Statistics.

The Aussies do a lot of things right, including the manner in which they treat visitors. Any visitors. They also have an interesting way of keeping affordable housing stock for their own. No foreigner is allowed to purchase a previously owned, or resale, home. All secondhand single-family homes and condominiums are reserved for Australians, thus keeping aging beach bums from the U.S. Pacific Northwest from acting out their dreams of rehabbing an oceanfront cottage.

Foreign investors can buy new homes that are still in the planning stage -- known as “off-the-plan” developments -- if they receive permission from the Foreign Investment Review Board. The developer is required to obtain the needed permits to sell up to 50% of the new units to nonresidents.

Down payments typically are 10% of the purchase price and are held in a legislated trust account. The developer cannot use this money until the property is completed. The full balance is due upon completion of the project, which usually gives the buyer at least 12 months to arrange the payment. Foreigners can also acquire vacant land to build a house on the condition that they start construction within 12 months of the land purchase.

If you don’t claim the home as your second residence, get ready for a significant tax bite, especially if you plan to fix it up and turn it over. The amount of capital gains tax will depend on the specific circumstances of the seller, such as what tax bracket he or she is in and the length of time he or she has owned the property. Generally, if you are purchasing a property for investment purposes and you sell the property within the first year, you are liable for a capital gains tax of 50%; 25% any time after the first year.

If you rent out your property, the rental income is subjected to Australian income tax. If the income earned from the rental of the Australian property is also taxable in the U.S., a credit is given for the tax paid in Australia.

It’s too expensive at the beach and foreigners can’t buy resale

Also, students must provide a letter from their university confirming the courses they are taking and the duration of those classes. They also must live at the property, not rent it out, and sell it when their student visa expires.

Tom Kelly is co-author of “How a Second Home Can Be Your Best Investment” with John Tuccillo, former chief economist for the National Assn. of Realtors.