grada Posted February 8, 2016 Share Posted February 8, 2016 Bit of a generic question I know! Short story is were approaching our 4th year here, and seriously considering a move back to UK (many many reasons, too many to list). My dilemma is what to do with our house here in Australia? Sell the house before we leave (bought it stupidly fairly recently so we'd have to try and sell it for what we paid for it, or close to), or rent the house out while we relocate to the UK. My reasoning behind this is that it's nice having the assets in bricks and mortar, and we don't know how long it'll take us to be eligible for a mortgage again once we hit UK shores. I'm thinking it could be a good idea to keep this one as an asset, and try and sell it once we become eligible for a UK home loan once again (with secure jobs etc). It would be good to hear from someone who has been in a similar situation? We'll probably do a holiday back home first just to make sure (not been able to afford a trip home since we landed 4 yrs ago!). Cheers. Link to comment Share on other sites More sharing options...
Guest Posted February 8, 2016 Share Posted February 8, 2016 Where is the house? Link to comment Share on other sites More sharing options...
Chortlepuss Posted February 8, 2016 Share Posted February 8, 2016 So many variables - If you think you may come back, it's tempting to rent it - as long as you won't do this at a loss. Non resident of Australia pay tax on all income (don't get tax free allowance) so is there plenty to offset? You'll need to do an annual tax return for Australia too. Would you make a gain or a loss from sale? Would it rent easily without hassle? I kept my UK house and am really glad I did now I'm returning but I can't deny that having to rent here (because I didn't release equity) has been a pain... Link to comment Share on other sites More sharing options...
grada Posted February 8, 2016 Author Share Posted February 8, 2016 Where is the house? Sunny Coast So many variables - If you think you may come back, it's tempting to rent it - as long as you won't do this at a loss. Non resident of Australia pay tax on all income (don't get tax free allowance) so is there plenty to offset? You'll need to do an annual tax return for Australia too. Would you make a gain or a loss from sale? Would it rent easily without hassle? I kept my UK house and am really glad I did now I'm returning but I can't deny that having to rent here (because I didn't release equity) has been a pain... Thinking we'd break even on the sale, would just be happy to sell it for what we'd paid for it, rental wise looking at the local market thinking there would be a small loss and would probably need to top up between $50 and $100 per week. It should rent out easily, its a nice house, 4 bed with pool near the beach, rentals round here don't stay vacant for long and this one is certainly a lot nicer than many of the rentals advertised. Link to comment Share on other sites More sharing options...
Chortlepuss Posted February 8, 2016 Share Posted February 8, 2016 You need to work out what you can deduct against the mortgage income - interest payments (will be high if you've just taken out a mortgage) - would you need to change your mortgage to a buy to let - possibly unless your lender agrees? There may be depreciation if the house is new. If you're going to make a profit, you'll pay tax on that plus you'll have to stump up for the weekly loss - You'll have to pay rates - sounds like a case of cut and run unless you expect house value to appreciate.... don't know market in sunny coast but would have thought it isn't a place with rapid house price inflation. Are you young? could you easily get another mortgage if you returned? If this is your last chance to have a property then that is a factor..... Otherwise if you can walk away unencumbered then that may be the best option. My house in UK gave me v poor rental return but being in SE has appreciated in price. The best houses to rent out are not likely to always be the best houses to live in as tenants may have differing priorities - Our house is in the country which people like but would have earned a stack more monthly income if it was 3 miles down the road near to the railway station..... Link to comment Share on other sites More sharing options...
Marisawright Posted February 8, 2016 Share Posted February 8, 2016 The big snag is that if you keep the house, you'll have to submit an Australian tax return every year and you'll be subject to Australian tax on the rental. That may not sound too bad - if it's a fairly new home, you would claim depreciation and could even make a profit BUT for the fact that as a non-resident, you'll get no tax-free threshold. That means every penny of the rent will be taxed at 30%. Then when you do ultimately sell it, you'll pay double the Capital Gains Tax that a resident would. I had a investment property in Darwin before I left, which paid me a nice income every year. The tax implications of keeping it were so bad that I sold it before we left. Wish I hadn't now as we will be going back! Link to comment Share on other sites More sharing options...
srh82 Posted February 8, 2016 Share Posted February 8, 2016 Cut your losses and sell it.... Tax, eughhhhhh..... Link to comment Share on other sites More sharing options...
Johnny Posted February 8, 2016 Share Posted February 8, 2016 Cut your losses and sell it.... Tax, eughhhhhh..... It's simple - what's the real short-term chances of it going up in value ? What's the economy doing, growing or shrinking ? If both are tanking, then dump it asap and cut your losses, get your money out and invested properly elsewhere . If you've taken out Aussie citizenship there are tax obligations that go with it. Link to comment Share on other sites More sharing options...
Marisawright Posted February 8, 2016 Share Posted February 8, 2016 If you've taken out Aussie citizenship there are tax obligations that go with it. There are tax implications whether or not you're a citizen. If you're a foreign national owning investments of any kind in Australia, you have to pay tax on it. Link to comment Share on other sites More sharing options...
Johnny Posted February 8, 2016 Share Posted February 8, 2016 There are tax implications whether or not you're a citizen. If you're a foreign national owning investments of any kind in Australia, you have to pay tax on it. For people in my situation who like to work for an international company, I could, if the opportunity arose, ask to be sent off overseas on an expat assignment to a Middle East or Asia office for a few years and I can enjoy full expat tax-free status being a UK citizen. Australian passport holders cannot ever have tax free expat status. Great if you never plan to work anywhere except Australia, it's not a problem. Link to comment Share on other sites More sharing options...
Marisawright Posted February 8, 2016 Share Posted February 8, 2016 For people in my situation who like to work for an international company, I could, if the opportunity arose, ask to be sent off overseas on an expat assignment to a Middle East or Asia office for a few years and I can enjoy full expat tax-free status being a UK citizen. My oh has also worked on similar contracts and you are right, his salary was tax-free. But that is a special arrangement while you are living in the country. If you had bought investments and then left the country, you would've become liable for tax as a non-resident. Different countries take different attitudes to non-residents: some give them more favourable treatment than nationals, some give them less favourable treatment. Australia is less favourable. Link to comment Share on other sites More sharing options...
Johnny Posted February 8, 2016 Share Posted February 8, 2016 My oh has also worked on similar contracts and you are right, his salary was tax-free. But that is a special arrangement while you are living in the country. If you had bought investments and then left the country, you would've become liable for tax as a non-resident. Different countries take different attitudes to non-residents: some give them more favourable treatment than nationals, some give them less favourable treatment. Australia is less favourable. As long as you have an Aussie passport you have to pay tax on worldwide income even if you don't own property or don't even live there. You are an Australian citizen once you have that passport, so you have to pay your taxes in Australia for the rest of your life There's no way out of it, not being resident or not owning property doesn't exempt you anymore. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted February 8, 2016 Share Posted February 8, 2016 As long as you have an Aussie passport you have to pay tax on worldwide income even if you don't own property or don't even live there. You are an Australian citizen once you have that passport, so you have to pay your taxes in Australia for the rest of your life There's no way out of it, not being resident or not owning property doesn't exempt you anymore. Total nonsense. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted February 8, 2016 Share Posted February 8, 2016 Unless you sense that you may ping pong back within, say, 12 months, you really should sell it as there are no advantages and heaps of disadvantages keeping it. Link to comment Share on other sites More sharing options...
Chortlepuss Posted February 8, 2016 Share Posted February 8, 2016 Total nonsense. If you're a non resident citizen you won't pay any tax unless you have Australian generated income (e.g property) in which case you'll be clobbered. Link to comment Share on other sites More sharing options...
JockinTas Posted February 8, 2016 Share Posted February 8, 2016 As long as you have an Aussie passport you have to pay tax on worldwide income even if you don't own property or don't even live there. You are an Australian citizen once you have that passport, so you have to pay your taxes in Australia for the rest of your life There's no way out of it, not being resident or not owning property doesn't exempt you anymore. Where on earth did you get that info from? Link to comment Share on other sites More sharing options...
Makybe Diva Posted February 8, 2016 Share Posted February 8, 2016 Where on earth did you get that info from? Christmas Cracker ? Link to comment Share on other sites More sharing options...
JockinTas Posted February 8, 2016 Share Posted February 8, 2016 Christmas Cracker ? :yes: Link to comment Share on other sites More sharing options...
Marisawright Posted February 8, 2016 Share Posted February 8, 2016 As long as you have an Aussie passport you have to pay tax on worldwide income even if you don't own property or don't even live there. You are an Australian citizen once you have that passport, so you have to pay your taxes in Australia for the rest of your life There's no way out of it, not being resident or not owning property doesn't exempt you anymore. Total rubbish. Where you pay tax is determined by whether you are legally resident in a country - it has NOTHING to do with citizenship. Link to comment Share on other sites More sharing options...
Wooba Posted February 8, 2016 Share Posted February 8, 2016 Total rubbish. Where you pay tax is determined by whether you are legally resident in a country - it has NOTHING to do with citizenship. Just an fyi, Americans pay tax worldwide, doesn't matter where they live. Link to comment Share on other sites More sharing options...
ramot Posted February 9, 2016 Share Posted February 9, 2016 Total rubbish. Where you pay tax is determined by whether you are legally resident in a country - it has NOTHING to do with citizenship. If you work in a country that has no tax, eg Brunei when we lived there, as British we were OK, but I think there is some rule that you mustn't spend more than a certain length of time in your home country annually? I seem to remember Australians had more of a problem with the tax situation? do all countries have a dual tax agreement with Australia? Link to comment Share on other sites More sharing options...
srh82 Posted February 9, 2016 Share Posted February 9, 2016 This is utter rubbish! Only Australian 'sourced' income, ie Australian property, if you are non-resident for Australian tax purposes is taxed at the non-resident tax rate. Any salary earned while non resident, remains taxable in the source country only, not Australia. If that country has zero income tax, then it is tax free. I'm not a tax professional but I know for sure that what you are saying is not true! Link to comment Share on other sites More sharing options...
ramot Posted February 9, 2016 Share Posted February 9, 2016 This is utter rubbish! Only Australian 'sourced' income, ie Australian property, if you are non-resident for Australian tax purposes is taxed at the non-resident tax rate. Any salary earned while non resident, remains taxable in the source country only, not Australia. If that country has zero income tax, then it is tax free. I'm not a tax professional but I know for sure that what you are saying is not true! Are you for real? If you are answering my post then please be polite, I was only mentioning a possibility, did I say it was true???? I certainly don't expect a poster to reply like you did, a polite no this isn't so would have sufficed. Link to comment Share on other sites More sharing options...
Ken Posted February 9, 2016 Share Posted February 9, 2016 As long as you have an Aussie passport you have to pay tax on worldwide income even if you don't own property or don't even live there. You are an Australian citizen once you have that passport, so you have to pay your taxes in Australia for the rest of your life There's no way out of it, not being resident or not owning property doesn't exempt you anymore. I think you're getting the Australian system mixed up with the US system. Australian citizens can readily be Non-Resident for tax purposes. Short-term assignments overseas are taxed however whereas in some countries that income would be exempt. Link to comment Share on other sites More sharing options...
srh82 Posted February 9, 2016 Share Posted February 9, 2016 @ramot. No, it was a comment to the suggestion that being an Australian Citizen means that your income is globally taxable, even if you are non resident in Australia for tax purposes. Nothing directly at you. Link to comment Share on other sites More sharing options...
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