Kooky Posted May 18, 2014 Share Posted May 18, 2014 Hi I am wondering if anyone can advise me. We are trying to sell our house and so far have had no luck. We want to get over to oz as soon as possible so we are now thinking of renting our uk home for a while before selling. We are trying to find information on both income tax (from rental) and capital gains tax (once we sell). We are not sure where to get the info from - can anyone advise us? Basically we we need to know A) if we will be liable to pay capital gains once we sell (we have a PR visa) and if so is the any exceptions to this (eg. Is there a time period where you are exempt etc). B) do we have to pay any income tax (either to the uk or australia) on the rental we collect? C) any other helpful advice/suggestions you have :-) thanks Quote Link to comment Share on other sites More sharing options...
Rupert Posted May 18, 2014 Share Posted May 18, 2014 There isn't really a yes / no answer to the capital gains tax question. It will depend on numerous things, like how long you leave it rented and whether you but a house in Australia and changing tax laws which you can never predict. Not to mention you would actually have to make a capital gain. I think people worry too much about CGT, with allowances etc. and considering gains would be prorated, it would have to be one hell of a gain for anyone to be liable for tax. Income tax, yes the income less expenses (like mortgage interest but not mortgage repayment) should be declared on both tax returns. UK gets first bite of the cherry, any tax you pay in UK is dedicated from the Australian return. Quote Link to comment Share on other sites More sharing options...
Kooky Posted May 18, 2014 Author Share Posted May 18, 2014 Thanks for this Rupert. You always seem to be able to advise me :wink: Quote Link to comment Share on other sites More sharing options...
Slean Wolfhead Posted May 21, 2014 Share Posted May 21, 2014 Hi I am wondering if anyone can advise me. We are trying to sell our house and so far have had no luck. We want to get over to oz as soon as possible so we are now thinking of renting our uk home for a while before selling. We are trying to find information on both income tax (from rental) and capital gains tax (once we sell). We are not sure where to get the info from - can anyone advise us? Basically we we need to know A) if we will be liable to pay capital gains once we sell (we have a PR visa) and if so is the any exceptions to this (eg. Is there a time period where you are exempt etc). B) do we have to pay any income tax (either to the uk or australia) on the rental we collect? C) any other helpful advice/suggestions you have :-) thanks And remember that you will retain a personal tax threshold in the UK before you need to pay any tax.....so if you're a couple you can split the rental income against both your tax returns. If you've only got one house you probably won't be liable for any tax, but if you own additional properties you might. Quote Link to comment Share on other sites More sharing options...
fletchaman Posted May 22, 2014 Share Posted May 22, 2014 Hi I am wondering if anyone can advise me. We are trying to sell our house and so far have had no luck. We want to get over to oz as soon as possible so we are now thinking of renting our uk home for a while before selling. We are trying to find information on both income tax (from rental) and capital gains tax (once we sell). We are not sure where to get the info from - can anyone advise us? Basically we we need to know A) if we will be liable to pay capital gains once we sell (we have a PR visa) and if so is the any exceptions to this (eg. Is there a time period where you are exempt etc). B) do we have to pay any income tax (either to the uk or australia) on the rental we collect? C) any other helpful advice/suggestions you have :-) thanks We rent our home out back in the UK if you go through an agent they will get you to fill out a tax form N1 i think but double check with estate agent. You will then just have to file a tax return every year for the rental income, which should always be well below your tax free threshold as you can deduct mortgage payments house insurances i e boiler, electrics, water pipes as well as building insurance, and any work you have to do to the house. We have kept our as a fail safe in case worse case scenario ever happens, plus it makes us a bit of pocket money Hope this helps David Quote Link to comment Share on other sites More sharing options...
Kooky Posted May 22, 2014 Author Share Posted May 22, 2014 Thanks everyone. We are thinking we won't rent (although have spite trial tenant wanting it!) as we have been told it is harder to sell when iris rented out and therefore will possibly take too long to sell (ultimately we want to sell it to allow us to buy in oz). We are considering just going to vacant possession and moving over anyway. Our mortgage is pretty small so we will just have to try and cover the payment until we sell! Still note thirdly sure it's the right thing to do but it may be necessary! Quote Link to comment Share on other sites More sharing options...
Melbpom Posted July 12, 2014 Share Posted July 12, 2014 We rent our home out back in the UK if you go through an agent they will get you to fill out a tax form N1 i think but double check with estate agent. You will then just have to file a tax return every year for the rental income, which should always be well below your tax free threshold as you can deduct mortgage payments house insurances i e boiler, electrics, water pipes as well as building insurance, and any work you have to do to the house. Hi, I'm looking to buy an investment property in UK to move back to as a base. But I'm confused about the tax. Wouldn't all Australian residents be classed as non UK residents and therefore not receive a tax free threshold? Quote Link to comment Share on other sites More sharing options...
Notts Posted July 12, 2014 Share Posted July 12, 2014 Hi, I'm looking to buy an investment property in UK to move back to as a base. But I'm confused about the tax. Wouldn't all Australian residents be classed as non UK residents and therefore not receive a tax free threshold? As the tax years and rules for tax residence differ between countries, it is possible to be tax resident in more than one country for the same period of time. Regardless of that, British citizens (and some others) are entitled to a UK personal allowance each year, even if they do not live in the UK. This may change in the future, as the UK Government is currently looking at a number of issues relating to non-residents. Quote Link to comment Share on other sites More sharing options...
Petkula73 Posted September 30, 2014 Share Posted September 30, 2014 I know this is from several months ago, but wondering how you got on? We own a house in the UK and rent here, but we're thinking of selling up and buying an Australian property as the tax is crippling. The UK personal allowance is pretty meaningless in my humble opinion. If a house is jointly owned, you can split the liability evenly. Once you've deducted repairs, maintenance and so on, you'd need to be earning 20,000 pounds net in the UK to start paying anything, then you'd only be paying at 20% up to something like 64,000 pounds in total. So even if you were receiving a rent of 5300 per month from your property in the UK, you'd only need to pay 8800 a year in tax. So basically, on a normal house you have no liability. However, what is screwing us is the Australian side of things. We earn approximately $1800 a month from our UK property, so $21000 per annum. We have no liability in the UK, but this is added to our Australian earnings and taxed at something like 40%, so basically we have a tax liability of around $8500 a year to the ATO. That's a real killer. If the property was in Australia, we could deduct a lot of the costs from our income tax bill, but as it's overseas we can't do anything except pay the tax. It makes much more sense in my opinion to sell up in the UK and invest the cash here to take advantage of the tax breaks on offer. Other little things make it expensive too. Our outgoings in the UK are more than the rental income coming in, so we need to send a few hundred dollars a month to service the debts. That's $24 a time with the ANZ, so $300 a year in fees to transfer cash overseas. Then we pay 10% plus VAT to the estate agents in the UK who manage the property plus need to pay for repairs and so on. It adds up. When you look at the dead money spent renting here, versus the little bit of money that's left from the UK property we're hemorrhaging cash. I worked out that even if house prices go up 35% in the next five years and the exchange rate moves back to around $2.2 to the pounds we're still worse off owning in the UK and renting here, than selling up and buying over here. Anyway, just my thoughts. I'm not a financial adviser, so don't pay much attention to any of this! Best to speak to a pro... Now we just need to accept that the house we can afford to buy here is going to be half the size of the one we rent - welcome to Australia, where you need to pay seven figures for a modest 3 bed home... Quote Link to comment Share on other sites More sharing options...
Wen66 Posted September 30, 2014 Share Posted September 30, 2014 Hi Petkula73. We are in the process of preparing our house for rental. Thank you for the info. We have been toying with the idea of selling but want to rent the house out for a couple of years. Quote Link to comment Share on other sites More sharing options...
KirkyG Posted October 23, 2014 Share Posted October 23, 2014 Hi - I am in a similar position, we have been in Oz for 3 years now and achieved PR in May, and am now considering selling my UK property. Is my Capital Gains liability calculated thus? Current Value of Property - Value of property 6 months after receiving PR = Capital Gains Liability? Thanks Quote Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted October 23, 2014 Share Posted October 23, 2014 Hi KirkyG If you are referring to Australian CGT then no this is not the way it will be calculated, it seems as though the 6 month period you refer to you are confusing with pension transfers. Generally for CGT purposes in Oz then the cost base is the value of the property in Oz dollars at the time you became an Australian Resident. Quote Link to comment Share on other sites More sharing options...
KirkyG Posted October 23, 2014 Share Posted October 23, 2014 Sorry, I guess my question then is, if I sell my property in the UK whose Tax regime am I subject to? (I think I know the answer to this one) Cheers PS I will be contacting you guys directly in due course. Quote Link to comment Share on other sites More sharing options...
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