Do you rent out your house in UK?

[Angelcake]

Hi Everyone,

We have our visa and can't sell our house - so just stuck in limbo!!

I'm now looking into the feasibility of renting out our house. We would need to release some equity first though.

Does anyone rent out their homes in the UK whilst living in Aus? Just wondered how the tax thing works? Does anyone have any hints or tips?

Ive had a letting company round who think I could get between £800 - £900 a month for mine. The only thing that concerns me is that we have a very long garden 140ft and it may put people off and people might neglect it, so we may have to pay for a gardener

Thanks
Angelcake

[Edinburger]

I rent my flat out in the UK. I don't pay tax as the rent only covers about 50% of the mortgage and is therefore not taxable. If you own it outright then you will need to pay tax on the rent as it's income. I believe it's handled by filling in a self assessment form and sending it to your tax office. Best check with them though.

[AndrewL]

Originally Posted by Edinburger

I rent my flat out in the UK. I don't pay tax as the rent only covers about 50% of the mortgage and is therefore not taxable. If you own it outright then you will need to pay tax on the rent as it's income. I believe it's handled by filling in a self assessment form and sending it to your tax office. Best check with them though.

I think the gist of the above post is in relation to having tax charged when you breach your personal allowance.

Remember that tax is likely to be due in Australia too.

[Edinburger]

It's due to the interest on the mortgage. The interest charged on my loan every month is more than I get for renting out the property, so it's not any benefit to me and is therefore untaxable. As time goes by and the interest/capital balance of monthly payments shifts i'll have to start paying tax on the amount of rent that is above the value ofthe monthly interest. Not likely to happen for a while :D

To check if you qualify fill in a NRL1 form from the tax office and they will let you know.

[AndrewL]

Originally Posted by Edinburger

It's due to the interest on the mortgage. The interest charged on my loan every month is more than I get for renting out the property, so it's not any benefit to me and is therefore untaxable. As time goes by and the interest/capital balance of monthly payments shifts i'll have to start paying tax on the amount of rent that is above the value ofthe monthly interest. Not likely to happen for a while :D

To check if you qualify fill in a NRL1 form from the tax office and they will let you know.

Hi, you'll still only pay tax in the UK when you breach your PA.

You will need to disclose the income in Australia, though. The reason is your deductions are dealt with differently and not fully against the rental income. Please be aware this is only the case if you are PR/Aust citizen.

Cheers, Andrew

[Edinburger]

Good advice.

Yeah you'll still only be taxed above your PA. I'm on a 457 so not too worried about the Aussie side of things, which is all well and good as it sounds like another layer of complexity!

[caroline]

From this financial year in australia you can offset any losses on a UK property against Australian earnings. We are in this position (and have PR here) and need to complete tax returns in both countries - not so easy when financial years end in different months in Australia and England! Waiting to hear back from our UK accountant as to what implications this may have on our UK tax return next year.

I would get some advice from a good accountant who knows about laws in both countries - not many do...

[AndrewL]

Originally Posted by Edinburger

Good advice.

Yeah you'll still only be taxed above your PA. I'm on a 457 so not too worried about the Aussie side of things, which is all well and good as it sounds like another layer of complexity!

Depending on your other assets outside of Australia, you might actually be better off bringing your worldwide income into the Australian tax net.

[AndrewL]

Originally Posted by caroline

From this financial year in australia you can offset any losses on a UK property against Australian earnings. We are in this position (and have PR here) and need to complete tax returns in both countries - not so easy when financial years end in different months in Australia and England! Waiting to hear back from our UK accountant as to what implications this may have on our UK tax return next year.

I would get some advice from a good accountant who knows about laws in both countries - not many do...

Hi, there have been changes with respect to the quarantining of foreign losses but you will most likely have a foreign gain on your return (if the only reason it is a loss is due to your mortgage), as the UK mortgage interest goes through as a D15 deduction.

You can use notional years to report foreign income if the amounts are generally consistent from month to month.

Cheers, Andrew

[Karen K]

Regarding your garden, when we rented a house we had to sign a contract to say we would leave the garden as we found it, otherwise they would hold money back to pay for a gardener XX