tax question on renting uk property

[melbourners hopefully]

Hi,

If we rent out our property in the UK,do we only pay tax on the eventual profits in the uk.

Also if we rent a property in Australia , and when we eventually sell our House in the UK do we have to pay capital gains tax in australia.

 

Thanks Sean

[Guest Liam]

Sean, tax wise it always depends on your visa type/residency and other factors to see how you are taxed. Either way you will only pay tax on the difference between the Income from the rent and your expenses on the UK property. If you pay tax in the UK then when you declare the income here you get tax credits here so that you do not double up on tax. This is just a rough answer so if possible contact a registered tax agent or accountant like Alan Collett on this site or his website Go Matilda - Your Gateway to Australia - Visa, Tax and Financial Planning for Australia for personal advice on your own situation.

 

Good news is that your primary residence is Captial Gains Tax free under Australian Tax rules and remains so for 6 years after you leave it, even if you rent it out! But beware if you buy in OZ then you can't claim CGT relief on both the UK and Australia for the same period. I always recommend people rent for the first year here and make sure they like the area before buying. We moved twice before we finally bought and are so glad we did not buy on first impressions as the area we settled in first looked great but had no services for working famillies.

 

Liam

[Guest Diane Paul and the kids]

Hi,

If we rent out our property in the UK,do we only pay tax on the eventual profits in the uk.

Also if we rent a property in Australia , and when we eventually sell our House in the UK do we have to pay capital gains tax in australia.

 

Thanks Sean

Hi,i think if you have an interest only mortgage on your uk property,it may help with tax because you still have the whole debt to pay off when the house sells,but we are going to see our accountant about this to make sure

[Guest AndrewL]

This might put the cat amongst the pigeons for a few of you but if you are paying off principal and interest of your UK rental, you are getting yourself into TOFA, which looks at exchange rate gains and losses. It assesses whether you have made a notional gain or loss by making the payments during the year, in comparison to its deemed acquisition fx rate at the date you became PR.

 

You may have been reading about FIFs; this is worse!