leaving a house in the uk, tax implications?

[mazzagirl]

Hi all

 

Just wondering if anyone can advise on the tax implications of leaving a property in the uk? We are planning on selling our house this summer and buying a smaller one that we can live in until we move and then will rent it out. We wouldn't be making any profit as rent would cover the mortgage but just wondered if anyone knew what this would mean tax wise, also do you need to declare it as a buy to let for mortgage purposes if its kinda classed as our main home (albeit we will be abroad)?

 

Thanks in advance for any advice.

[Rupert]

Your mortgage is not tax deductible, only the interest charged on the mortgage us tax deductible, so with the very low interest rates in the UK you would almost certainly be making a profit. If you re going on permanent visaa you declare the profit on UK and Australian tax returns and any tax you pay in the UK is recorded as a tax credit on Australia, so you don't end up paying tax twice.

 

Why are you buying the second house in UK? If you are selling up anyway wouldn't you prefer to keep funds liquid?

[Gbye grey sky]

You need to inform the lender that the property is being let. You can also deduct agent fees and other expenses against tax.

[mazzagirl]

Well my thinking was it would be good to be a house here so that 1, we don't have to pay the £8000 redemption, 2, it would be our pension and 3, we can forsee that while a long way off we would perhaps in retirement like to live in both countries. We would only be leaving a relatively small deposit in it and would be taking the bulk of our equity to australia to buy a house there. I suppose the next question for me is can just I declare it as an income of sorts as I probably won't work in Oz or if I do its likely to be part time as we have 3 young children, thereby minimising any tax we pay? guessing in reality this will make no difference but worth asking? Thanks

[rammygirl]

But when you do come to sell it capital gains will be payable don't forget that.

[Rupert]

Well my thinking was it would be good to be a house here so that 1, we don't have to pay the £8000 redemption, 2, it would be our pension and 3, we can forsee that while a long way off we would perhaps in retirement like to live in both countries. We would only be leaving a relatively small deposit in it and would be taking the bulk of our equity to australia to buy a house there. I suppose the next question for me is can just I declare it as an income of sorts as I probably won't work in Oz or if I do its likely to be part time as we have 3 young children, thereby minimising any tax we pay? guessing in reality this will make no difference but worth asking? Thanks

 

If the house is in joint names then you need to split the income and expenses and both declare it. If you want only you to pay tax then your husband needs to sign the house over to you.

[Gbye grey sky]

What is the £8000 redemption?

 

Bear in mind it will be taxable income in the UK first and there is a possibility that the personal allowance will be removed from non residents next year so all profit will be subject to UK tax.

 

I did briefly consider what you are planning but ultimately decided against not least because owning a property on the opposite side of the world and having to do tax returns in both countries seemed like too hassle when compared with any possible benefit.

 

I would recommend getting professional advice really as there are numerous investment opportunities. I always think us Brits are hard-wired to favour property as an investment above all else.

[jimmyay1]

But when you do come to sell it capital gains will be payable don't forget that.

 

This is a complicated area . CGT may not be payable as it was your primary residence in the uk so you do have several years grace. However it is a changing area of tax law and new CGT rules for non doms are coming in soon. They arent retrospective but still need to b aware of them.