desreb Posted June 23, 2013 Share Posted June 23, 2013 Hi All, I have a question which is turning out to be quite ungooglable, so thought I might ask here. We have a UK house (ex-primary residence) that we let out, and pay off a mortgage - Principle + Interest. In terms of investment, we make a gain - the rental income is more than the cost of the mortgage interest and rental fees. However, in cashflow terms, we make a loss (the mortgage principal + interest) - ie. paying off the mortgage owed on the house - is higher than the rent that comes in. In these circumstances, since our income is going into the value of the house, do we declare that income on our AU Tax Return (as Permanent Residents)? Or do we omit that as a capital investment, and then assess the house for CGT if and well we sell it? And overall.... is any foreign gain/income (eg. UK bank interest) assessed as that interest pays into the UK account, or only if if is brought into Australia? Thanks! D Link to comment Share on other sites More sharing options...
Notts Posted June 23, 2013 Share Posted June 23, 2013 Your rental income (less interest and other deductions) is assessable in Australia as it arises. Your income is not going into the capital value of the house - it is servicing and reducing the loan. If you pay tax in the UK on the rental income then you can claim a tax credit on your Australian return. There may also be CGT to consider when you sell. Your interest income is also assessable as it arises - whether/when it is remitted to Australia is irrelevant (unless you make significant foreign exchange gains/losses before you bring it over). Link to comment Share on other sites More sharing options...
desreb Posted June 23, 2013 Author Share Posted June 23, 2013 Thanks Notts - that makes sense Link to comment Share on other sites More sharing options...
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