Melbpom Posted January 28, 2016 Share Posted January 28, 2016 Hi, I'd really like some advice if anyone has dealt with tax returns in UK and Oz. The situation is that I have a half share in a very modest flat in the UK with my parents. It was bought in May and has been empty until my parents moved back in December. They've now bought a house and will be moving into it in March leaving the flat empty again. The plan is that I buy my parents share and own it fully and lease it out. There is some pressure for me to buy my parents out and when they were here they asked me to sign an affidavit saying that I would do so. If it was rented out the rent would be modest about 400-450 pounds per month less agents fees. I'm trying to decide whether to try to keep it or sell it. Keeping will only be an option if I can get someone to give me a mortgage against it because I don't have the cash. I'm also concerned about being taxed in both countries. It takes me all my time to complete a tax return here usually lodging online at the very last moment. The thought of working out the UK system leaves me cold. I got a quote from Gomatilda and for them to do the returns wouldn't be cheap and that's why I'm wondering whether the income would be too low to justify going through the process? This is probably not quite the right section of the forum to ask about tax and mortgages but I'd rather keep things as private as I can. Link to comment Share on other sites More sharing options...
Guest Posted January 28, 2016 Share Posted January 28, 2016 I think it is very unlikely you will get a mortgage for a UK property but do look into ex-pat mortgages. The tax situation isn't too difficult - you need to register as a non-resident landlord in the UK - that's a simple form that your letting agent will probably supply. Your letting agent is obliged to deduct tax and you will have to do a UK tax return but it is incredibly simple and you will then get that tax refunded. The reason it is refunded is because for tax purposes your are resident in Australia and due to double taxation laws you cannot be taxed on the same income in both countires. Australia is in fact very favourable to landlords as losses can be written off against employment tax (negative gearing) and there are a lot of allowances you can claim for depreciation - it is probably worth paying an accountant at least once to make sure you are aware of everything that can be claimed. That said we rented property out in the UK and I would not recommend it - we ended up with our house wrecked beyond belief, it was like something off a reality TV show - human excrement was left in the garden, seven urine soaked mattresses had to be removed, there was holes bashed in walls and doors etc. etc. etc. It cosy us about £10k in lost rent and repairs & required me to come to the UK to try and sort it as my friends could only do so much (& I had to sack the letting agent who had effectively caused the problem) Sell, that's my advice! Link to comment Share on other sites More sharing options...
bristolman Posted January 28, 2016 Share Posted January 28, 2016 I think it is worth pointing out that most tenants wouldn't treat the property in the way you have described and would do the right thing. When we used to rent we often left the place better than when we moved in. Link to comment Share on other sites More sharing options...
Guest Posted January 28, 2016 Share Posted January 28, 2016 I think it is worth pointing out that most tenants wouldn't treat the property in the way you have described and would do the right thing. When we used to rent we often left the place better than when we moved in. I agree although we have had two bad experiences out of three - thankfully we had insurance for the last ones so could claim the none paid rent and court fees would have been covered though it didn't end up in court. It is just way harder to deal with these problems in a different time zone a long way away. I've rented properties out for 18 years but doing it from Australia was a different kettle of fish. Link to comment Share on other sites More sharing options...
namron1 Posted January 29, 2016 Share Posted January 29, 2016 UK Housing is at the top of the market right now and spring is the top season to sell property in the UK, I would work with your parents for them to market the property and sell it if possible between now and May, I would say that is the best option in the circumstances you outline, or at least get some estate agents round to give you a market overview of the property Link to comment Share on other sites More sharing options...
Imapla Posted January 31, 2016 Share Posted January 31, 2016 Hi - I think getting a mortgage will be the hard part - would you be better selling it and then buying an investment property in Aus instead which would be easier to manage ? Link to comment Share on other sites More sharing options...
Melbpom Posted February 2, 2016 Author Share Posted February 2, 2016 Thank you for your replies and I do appreciate the advice to sell and I'm also comforted by the fact the UK tax return would not be that difficult. The truth is that the head says sell and the heart says keep. For me this flat is a link back to the UK and if I ever went back (in say 3/4 years after son finished uni) it would be a roof over my head while I got sorted. Clearly I need to work out whether keeping is feasible and I realise that the only way I can do that is write a list of income vs expenses. On initial figures it would be positively geared but with council rates and services charges I'm not sure what the result would be. As for an investment property here, it wouldn't be possible because unit prices start at $300K (the UK flat is about $140K). Also I've started a new business recently and my financials are iffy to say the least. It would make life more comfortable if I brought the money back but nothing ventured nothing gained. Link to comment Share on other sites More sharing options...
Chortlepuss Posted February 4, 2016 Share Posted February 4, 2016 UK Housing is at the top of the market right now and spring is the top season to sell property in the UK, I would work with your parents for them to market the property and sell it if possible between now and May, I would say that is the best option in the circumstances you outline, or at least get some estate agents round to give you a market overview of the property I certainly feel that we're turning a bit of a corner with housing... there may be a scramble to snap up buy to let in your area before April but you may be pushing it.... It is a pain to let a house in the UK when based in Australia, but it does give you an easy way back - both a blessing and a curse! I'm glad that we kept our house now, and don't have to go back to rental Link to comment Share on other sites More sharing options...
robswife Posted February 4, 2016 Share Posted February 4, 2016 Having spent hours seeking out expat mortgages and getting nowhere my biggest regret was selling our house in th UK as it it now seems we have no chance of getting a mortgage of any sort. I go back to the UK at least once a year, on my last couple of visits I approached mortgage broker and bank/building society for mortgage, my building society said it was not impossible but expected one of us to be resident and working in UK for at least 6 months in a permanent position, if that position had a probationary period that was not included it had to be permanent for at least 6 months... The thing is we could comfortably afford a mortgage in the UK but no one appears interested if you are in Australia... If anyone has any information/help in this area I too would be interested :notworthy: Link to comment Share on other sites More sharing options...
Melbpom Posted July 3, 2016 Author Share Posted July 3, 2016 A quick update on the flat situation. I tried to get a mortgage against it and although it would be positively geared the loan amount was too small. Also a recent tax seems to have been introduced which as I understand it means that the stamp duty (or UK equivalent) is increased by a flat 3% for every second and subsequent property. This means that if I were ever to return and buy a house to live in (say 300k GBP) then I would be paying a premium (of 9k GBP). So flat is up for sale and I'm hoping it will sell soon and stem the outgoings. Link to comment Share on other sites More sharing options...
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