Redrover Posted January 20, 2014 Share Posted January 20, 2014 For the rental income: you'd pay tax in the uk on your rent minus allowable deductions (mortgage interest, repairs and maintenance, agents fees, wear and tear on furnishings) but you also qualify for the uk tax free allowance. The uk rental income minus deductions would also count as additional income in Aus so would incur Aussie income tax but you can offset this with any tax paid in the uk (the reciprocal arrangement). In reality unless you own an expensive home you won't pay much tax in the uk but will pay in Aus at your top income tax rate. Link to comment Share on other sites More sharing options...
tracybayliss Posted January 20, 2014 Author Share Posted January 20, 2014 For the rental income: you'd pay tax in the uk on your rent minus allowable deductions (mortgage interest, repairs and maintenance, agents fees, wear and tear on furnishings) but you also qualify for the uk tax free allowance. The uk rental income minus deductions would also count as additional income in Aus so would incur Aussie income tax but you can offset this with any tax paid in the uk (the reciprocal arrangement). In reality unless you own an expensive home you won't pay much tax in the uk but will pay in Aus at your top income tax rate. Hi depends what you mean by expensive. Still cannt get my head round being taxed twice. Think my concern more with when it comes to selling we have worked hard to get our house and pay for it need to know rules on tax or who is best for advice. Link to comment Share on other sites More sharing options...
Alan Collett Posted January 20, 2014 Share Posted January 20, 2014 Hi depends what you mean by expensive. Still cannt get my head round being taxed twice. Think my concern more with when it comes to selling we have worked hard to get our house and pay for it need to know rules on tax or who is best for advice. Income tax: you get a credit for any tax you have already paid in one country, which reduces the tax payable in the other. CGT: you may not have any tax to pay on the sale of a former main residence, particularly if you are living in Australia, you have been renting in Australia, and you are selling your former main residence in the UK within 6 years of moving to Australia. For further assistance: http://www.gmtax.com.au/contact/ Best regards. Link to comment Share on other sites More sharing options...
Marisawright Posted January 20, 2014 Share Posted January 20, 2014 god I've never been so confused in my life.. So please in really simple terms are you saying if we rent our house we would pay tax to the tax office in the uk and the tax to oz office as well how unfair is that. No, definitely not. You have to declare the income on your tax return in the Foreign section, BUT you also declare how much you paid in UK tax. If you do that, the Australian govt will give you a credit and won't tax you again. Link to comment Share on other sites More sharing options...
Alan Collett Posted January 20, 2014 Share Posted January 20, 2014 No, definitely not. You have to declare the income on your tax return in the Foreign section, BUT you also declare how much you paid in UK tax. If you do that, the Australian govt will give you a credit and won't tax you again. There may be a balance of tax payable to the Australian Taxation Office if your marginal rate of income tax is higher in Australia than you have already paid to HM Revenue in the UK. Best regards. Link to comment Share on other sites More sharing options...
Redrover Posted January 21, 2014 Share Posted January 21, 2014 Easiest way of thinking about tax on uk rental income for perm residents whose main income is in Aus: Taxable rental income = rent received - mortgage interest paid - repairs - agents fees - wear and tear (if furnished) You pay tax on the taxable rental income based on Aussie income tax rates. So add this income to your other Aussie income and work out the total income tax due. The difference between this and the income tax you would owe without the rental income is the tax you have to pay on the rent. Generally this means the rent is taxed at your highest Aussie tax band although it may push you into a higher band. You are not taxed twice. The only subtlety is you may pay some of that to the uk government and some to the Aussie government as per rules listed earlier in the thread. This depends on your personal situation. The total is the same. Link to comment Share on other sites More sharing options...
GiveAGirlShoes Posted January 21, 2014 Share Posted January 21, 2014 If the money stays in the uk does all this apply just the same? ie you receive monthly rent payment in the uk which covers your mortgage and fees so you break even? I suppose it does as its still income and it would technically be a persons decision to pay the mortgage with it, but I just wanted to check as I've been keeping tabs on this thread, albeit I will most likely be renting with a mortgage :rolleyes: Link to comment Share on other sites More sharing options...
Gbye grey sky Posted January 21, 2014 Share Posted January 21, 2014 Unless you are on a temporary visa or have an intention or consideration to move back to the UK and the same house I don't really understand the benefits of keeping a property on the other side of the planet to where you are living. Would you live in the UK and buy a property in Oz to let out? It is the same thing really. Besides all the tax complications there is property maintenance to worry about and hoping for reliable tenants. Your agent would know that you are a long way away so how conscientious will he be too. Moving your life and family to Australia presents enough issues to deal with. Why add to it? Link to comment Share on other sites More sharing options...
Gbye grey sky Posted January 21, 2014 Share Posted January 21, 2014 Hi guys we need to be in oz before may 13 as our visa runs out we know its impossible to sell our house we have no mortgage and was going to rent probably anyway so does this have any implications. Someone mentioned something bout tax can anyone shed any light on this we don't plan to do it long term maybe two years as a bit of a income until we settle,. Thanks Just noticed what you said here. Why is it impossible to sell your house? Link to comment Share on other sites More sharing options...
GiveAGirlShoes Posted January 21, 2014 Share Posted January 21, 2014 Unless you are on a temporary visa or have an intention or consideration to move back to the UK and the same house I don't really understand the benefits of keeping a property on the other side of the planet to where you are living. Would you live in the UK and buy a property in Oz to let out? It is the same thing really. Besides all the tax complications there is property maintenance to worry about and hoping for reliable tenants. Your agent would know that you are a long way away so how conscientious will he be too. Moving your life and family to Australia presents enough issues to deal with. Why add to it? I don't disagree... but... The house has been in the family for over 40yrs, we'd like to keep it that way but no one will be in a position to buy for a good while (a bit too young!). I guess once we're out there it'll be a case of what house? but until that time comes it is what it is. I completely understand where you're coming from though, my OH lost his dad a couple of years ago so its more of a sentimental thing on his part, and for him letting go may be a bit more of a rollercoaster ride than it will be for me x Emotions will be considered, along with logic :rolleyes: Link to comment Share on other sites More sharing options...
Flathead Posted January 21, 2014 Share Posted January 21, 2014 If the money stays in the uk does all this apply just the same? ie you receive monthly rent payment in the uk which covers your mortgage and fees so you break even?I suppose it does as its still income and it would technically be a persons decision to pay the mortgage with it, but I just wanted to check as I've been keeping tabs on this thread, albeit I will most likely be renting with a mortgage :rolleyes: Doesn't matter where the money stays.....it is still considered as income if you are living in Australia and needs to be declared Link to comment Share on other sites More sharing options...
Redrover Posted January 22, 2014 Share Posted January 22, 2014 If the money stays in the uk does all this apply just the same? ie you receive monthly rent payment in the uk which covers your mortgage and fees so you break even?I suppose it does as its still income and it would technically be a persons decision to pay the mortgage with it, but I just wanted to check as I've been keeping tabs on this thread, albeit I will most likely be renting with a mortgage :rolleyes: Also worth highlighting that you only 'break even' for tax purposes and pay no tax anywhere on the rent if taxable rental income (see definition above) <= 0. Note this does not allow you to deduct capital repayments, ie where part of your mortgage payments each month reduce the amount you owe. So your statement 'covers your mortgage and fees so you break even' should read 'covers your mortgage interest and fees so you break even'. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted January 22, 2014 Share Posted January 22, 2014 Also worth pointing out that you must inform your lender, insurer, utility companies that you are proposing to let the property. You may wish to consider switching to an interest only mortgage too as you may find that the capital element of your mortgage payment could be better spent. There is a form to fill in for the UK tax office as an overseas landlord which allows you to receive the rent gross otherwise the tenant or agent must deduct BR tax before paying it to you though any reputable agent will explain that part. Love Shoes - I see your point but I would be a bit worried that if there is such a strong emotional attachment to a house in the UK let alone the more common attachments such as family, friends, lifestyle your OH may struggle letting go when he gets to Oz. Link to comment Share on other sites More sharing options...
GiveAGirlShoes Posted January 22, 2014 Share Posted January 22, 2014 I see your point but I would be a bit worried that if there is such a strong emotional attachment to a house in the UK let alone the more common attachments such as family, friends, lifestyle your OH may struggle letting go when he gets to Oz. Duly Noted! Thanks for the comments, apologies if I've taken away any attention from the OP Link to comment Share on other sites More sharing options...
2and3 Posted January 29, 2014 Share Posted January 29, 2014 There is a form to fill in for the UK tax office as an overseas landlord which allows you to receive the rent gross otherwise the tenant or agent must deduct BR tax before paying it to you though any reputable agent will explain that part. . Ugh - sooo confused !! What is BR tax ? Have I got this straight? We get the form from HMRC in the UK - overseas landlord. Fill in along with other UK earnings. Then when we do our oz tax we add the rent? from the house to our earnings here and also add in the tax we have already paid for said house in the correct box. We have been renting our house out for the last 2 years -but no agent. Our UK accountant last year never did any of this and now this years one is picking up on it and how the lady renting the house should have been doing some forms ?? So confusing. Yes our lender knows we are in Oz and has renewed our permission to let -but that's about the only 'formal' thing we have done. Oh I feel more paper work heading our way !! Link to comment Share on other sites More sharing options...
Alan Collett Posted January 29, 2014 Share Posted January 29, 2014 Ugh - sooo confused !! What is BR tax ? Have I got this straight? We get the form from HMRC in the UK - overseas landlord. Fill in along with other UK earnings. Then when we do our oz tax we add the rent? from the house to our earnings here and also add in the tax we have already paid for said house in the correct box. We have been renting our house out for the last 2 years -but no agent. Our UK accountant last year never did any of this and now this years one is picking up on it and how the lady renting the house should have been doing some forms ?? So confusing. Yes our lender knows we are in Oz and has renewed our permission to let -but that's about the only 'formal' thing we have done. Oh I feel more paper work heading our way !! Liaise with your accountant - preferably (if I might say) one who understands UK and Australian tax. S/he should be guiding you through the paperwork and what you should be doing. BR Tax = Basic Rate Tax. Best regards. Link to comment Share on other sites More sharing options...
Flappers263 Posted January 29, 2014 Share Posted January 29, 2014 we are planning on renting our house out later this year so thanks all for the information Link to comment Share on other sites More sharing options...
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