I an an Australian citizen, and I am interested in purchasing mortgage notes secured by California real estate. The payments are tendered monthly. What are the tax ramifications in the US? Is there a higher tax rate in Australia on money earned out of the country?
US-Australian tax treaty limits the tax the US can levy on interest payments to Australian residents at 10%. However, that is the "worst" situation. There are several exempted situations which your specific example may fall into where you wouldn't need to deal with the US taxes at all. I suggest contacting a tax accountant proficient in that treaty and the Australian tax law. You will still be obviously paying taxes in Australia.