Tax on Rental Income from UK

[Jambos]

We are looking to rent our property in the UK when we move to Oz in Jan-13.

 

I believe we can apply for UK tax exemption via the NLR1 form and then any tax implications can then be dealt with in Oz.

 

If we are using this income to pay rent or offset against a mortgage for the family home in oz (have not decided on rent or buy yet) can we also apply for an exemption in Australia?

 

If someone could clarify this it would be very much appreciated.

 

Cheers:ssign4::ssign4:

[NickyNook]

If you're coming here on a permanent visa then your overseas income is assessable in Australia. The fact that you might use this money to pay rent or a mortgage here makes no difference to what tax is due in Australia.

 

However, you can offset any UK mortgage interest payments and other expenses relating to your UK investment property against your UK rent. So only the net rent is assessable, after interest and expenses are deducted. If the property is negatively geared (ie you make an overall loss) the loss can be applied to your Australian income and reduce tax due.

[Chortlepuss]

If you're coming here on a permanent visa then your overseas income is assessable in Australia. The fact that you might use this money to pay rent or a mortgage here makes no difference to what tax is due in Australia.

 

However, you can offset any UK mortgage interest payments and other expenses relating to your UK investment property against your UK rent. So only the net rent is assessable, after interest and expenses are deducted. If the property is negatively geared (ie you make an overall loss) the loss can be applied to your Australian income and reduce tax due.

 

If you're thinking of buying here, it may be worth releasing some equity in your UK property and increasing the mortage so you can offset more interest. We are very positively geared and get screwed by the Australian Tax Office, despite not making an actual profit on the property

[Jambos]

If you're coming here on a permanent visa then your overseas income is assessable in Australia. The fact that you might use this money to pay rent or a mortgage here makes no difference to what tax is due in Australia.

 

However, you can offset any UK mortgage interest payments and other expenses relating to your UK investment property against your UK rent. So only the net rent is assessable, after interest and expenses are deducted. If the property is negatively geared (ie you make an overall loss) the loss can be applied to your Australian income and reduce tax due.

 

Hi NickyNook.. Yes, we are coming over on a permanent visa. If neither of us are working for a period of time we are receiving rent from uk i.e say $1350 AUD / Month what would the tax position be in Oz?

 

Thanks

[Jambos]

If you're thinking of buying here, it may be worth releasing some equity in your UK property and increasing the mortage so you can offset more interest. We are very positively geared and get screwed by the Australian Tax Office, despite not making an actual profit on the property

 

Hi Chortlepuss..Yes we could do this but then I imagine the picture starts to get very complicated releasing equity would mean paying more in interest payments from the uk side less the interest received on the released capital and any tax relief from the Oz tax office. We do have a flexible mortgage and we could release equity as we have only £500 left to pay on the mortgage (just avoiding paying any redemption charges) a good position to be in though. I guess we would need an accountant to assess the net implications.

[NickyNook]

Hi NickyNook.. Yes, we are coming over on a permanent visa. If neither of us are working for a period of time we are receiving rent from uk i.e say $1350 AUD / Month what would the tax position be in Oz?

 

Thanks

 

If the $1350 a month is your only income then that's $16200 pa (or $8100 each if split across two people). No tax will be payable on that amount as it's less than the minimum threshold.

 

See the Tax Calculator here for an estimate of tax payable for varying incomes.

[Guest]

I would recommend a chat with Alan Collett of http://www.gmtax.com.au / Go Matilda. He is a registered accountant in both the UK and Oz and can advise you the best way to proceed.