To sell or rent out Aussie property

[KTM1963]

Hi all

After 28 years in Australia, originally went as a 1 year back packer and subsequently got PR and citizenship, my year to test the waters back home is going brilliantly.  I have been very unsettled in Melbourne for 5 years or so and decided to head back earlier this year (Feb 2017), locking up my unit in case things went pear shaped.  Anyway, I love it.  Live in Worcester, have life time friends and family close by and everywhere is so accessible.  Back from Barcelona today and off to Budapest on Thu.  Got work easily and now have taken on a full time job.  My question is what are the consequences, tax wise, if I decide to rent out  my unit rather than sell when I head back on my return flight in Feb 2018.  My accountant advised I will get tax credits from the UK re work but need to find out more and also want to ask if everyone who has left permanently did final tax returns, took themselves off the electoral role etc...also, I have some removalist quotes which seem quite high if you want to take most of your stuff.  Any help would be appreciated.  After living in black in white (without realising, I feel I now live in technicolour :))

 

[MARYROSE02]

There is a taxation agreement between the two countries to ensure you are not taxed twice but you will probably have to submit a tax return in both countries. When I lived in England I had to declare my Australian income which included rent from my unit in Sydney. I had submit a self-assessment return for a few years before HMRC told me I could stop although my tax status was "domiciled in Australia" because I always intended to return there.

Now I continue to submit a return to HMRC because I have income from the UK - rent and pension - and declare my UK income, or part of it - on my ATO return. I see you have an English accountant. It might be wise to find one in Australia, although I'm told the online forms are relatively simple to use. I do my UK returns myself using the HMRC website.

[bunbury61]

On ‎19‎/‎09‎/‎2017 at 22:12, KTM1963 said:

Hi all

After 28 years in Australia, originally went as a 1 year back packer and subsequently got PR and citizenship, my year to test the waters back home is going brilliantly.  I have been very unsettled in Melbourne for 5 years or so and decided to head back earlier this year (Feb 2017), locking up my unit in case things went pear shaped.  Anyway, I love it.  Live in Worcester, have life time friends and family close by and everywhere is so accessible.  Back from Barcelona today and off to Budapest on Thu.  Got work easily and now have taken on a full time job.  My question is what are the consequences, tax wise, if I decide to rent out  my unit rather than sell when I head back on my return flight in Feb 2018.  My accountant advised I will get tax credits from the UK re work but need to find out more and also want to ask if everyone who has left permanently did final tax returns, took themselves off the electoral role etc...also, I have some removalist quotes which seem quite high if you want to take most of your stuff.  Any help would be appreciated.  After living in black in white (without realising, I feel I now live in technicolour :))

 

rent it ...dont sell it .

 

[newjez]

1 hour ago, bunbury61 said:

rent it ...dont sell it .

 

Why on god's earth would you do that?

The exchange rate from oz to UK is fantastic. If you have capital in it, I would sell it. I think it would be foolish to turn your nose up at a gift exchange rate.

[bunbury61]

44 minutes ago, newjez said:

Why on god's earth would you do that?

The exchange rate from oz to UK is fantastic. If you have capital in it, I would sell it. I think it would be foolish to turn your nose up at a gift exchange rate.

because houses gain in value .

if he sells now for lets say 400 dollars ...in ten years , it will be worth 600 -900 ,000.

he could have had the rent off it in the meantime , plus he will have a bolt hole back in oz , if things don't work out in the u.k

That's why !

[ramot]

Depends if the OP needs the money to set up in UK.

We kept our house in London and never regretted it. There has never been any problem renting it out, we use an agent, and the rent has paid the mortgage.

It is worth considerably more 14 years later, was the right thing for us to do, but everybody has to make their own decisions depending on their financial position.

[Collie]

10 minutes ago, bunbury61 said:

because houses gain in value .

if he sells now for lets say 400 dollars ...in ten years , it will be worth 600 -900 ,000.

he could have had the rent off it in the meantime , plus he will have a bolt hole back in oz , if things don't work out in the u.k

That's why !

They don't always gain in value, that is an opinion, markets go up and down,  unless you are going to guarantee the value in 10 years.  Also is property going to outperform other investment options for the OP's timeframe?  Are you a qualifed financial advisor?  (I'm guessing not).

eg property in Perth is down quite a bit on 4 years ago (and still falling).  Property in Ireland dropped 50-60% after 2007, and although now recovering (well Dublin & surrounds), it is still 20-30% below it's peak of 2007.

To the OP, there are a number of factors to consider

• Do you need the money in the UK in the short-medium term? (eg to buy in the UK or other uses)
• Is property your investment of choice? (how diversified are you?)
• Do you ever plan to return to Melbourne?
• What do you think is going to happen to the f/x rate?  which means having a view on Brexit.  While the rate is quite good now it may go either way depending on a soft/hard Brexit.  Most forecasts are for very soft economic growth in the UK for the forseeable future which will weaken the GBP (good for you if transferring AUD over), the impact of interest rate rises to curb inflation will strengthen the GBP (bad for you)

So it really depends on your outlook for the UK, Australia, your appetiite for risk, your investment preferences (Property, shares, bonds etc).

You have 2 decisions.

Do I wish to keep some assets in Australia (or AUD)?  You probably have super in Australia already (Good hedge on Brexit)

Do I wish to keep the investment in property (and your specific property) or sell and move it into another asset class (managed fund)?

 

Some professional advice looking across your entire financial position and what your financial goals are is probably required to give you an accurate answer (go fee for service to ensure you are getting unbiased advice).

 

My own view (not related to your specific situation but on the relevant components):

The short to medium term outlook for Australia is probably better than the UK (ie I'd rather have assets in AUD then GBP right now)

Many forecasts are saying that Melbourne property is reaching a peak, particularly in units - with an oversupply expected to hit the market in the next 12-18 months (but then Melbourne is growing, so tough to call)

Over the long term, equities generally outperform all other asset classes.

Equities or managed funds are a lot more liquid and less hassle than a property investment.

 

[Collie]

Should also add, if you are living overseas, it really only makes sense to have a property investment in Australia if it is positively geared.

 

[MARYROSE02]

I suppose you could have an "each way bet" and rent it out first then sell if you decide to stay in the UK permanently. I rented my Sydney flat out for 12 years whilst I was in England and now I've rented my UK house for 9 years. However, I always intended to move back to Australia (also proof of Australian domicile for HMRC - owned home in Australia but lived with my parents in the UK) but I doubt if I'll ever move back to the UK. There is also the question of "yield?" The rent I get from the house in the UK versus how much I'd get if I sold it and invested the money? (Do you have to factor in the (hopefully) increase in value in the home?) Would/could I have been better off had I sold my unit in Sydney, bought a home in the UK, sold in the UK and bought again in Sydney?

I've probably been to sentimental about my homes. My parents helped me buy this unit in Sydney 30 years ago, and the house in the UK was their home, although in my defence, when I came back to Sydney I was thinking that I might go back to the UK.

 

[bunbury61]

47 minutes ago, Collie said:

They don't always gain in value, that is an opinion, markets go up and down,  unless you are going to guarantee the value in 10 years.  Also is property going to outperform other investment options for the OP's timeframe?  Are you a qualifed financial advisor?  (I'm guessing not).

eg property in Perth is down quite a bit on 4 years ago (and still falling).  Property in Ireland dropped 50-60% after 2007, and although now recovering (well Dublin & surrounds), it is still 20-30% below it's peak of 2007.

To the OP, there are a number of factors to consider

• Do you need the money in the UK in the short-medium term? (eg to buy in the UK or other uses)
• Is property your investment of choice? (how diversified are you?)
• Do you ever plan to return to Melbourne?
• What do you think is going to happen to the f/x rate?  which means having a view on Brexit.  While the rate is quite good now it may go either way depending on a soft/hard Brexit.  Most forecasts are for very soft economic growth in the UK for the forseeable future which will weaken the GBP (good for you if transferring AUD over), the impact of interest rate rises to curb inflation will strengthen the GBP (bad for you)

So it really depends on your outlook for the UK, Australia, your appetiite for risk, your investment preferences (Property, shares, bonds etc).

You have 2 decisions.

Do I wish to keep some assets in Australia (or AUD)?  You probably have super in Australia already (Good hedge on Brexit)

Do I wish to keep the investment in property (and your specific property) or sell and move it into another asset class (managed fund)?

 

Some professional advice looking across your entire financial position and what your financial goals are is probably required to give you an accurate answer (go fee for service to ensure you are getting unbiased advice).

 

My own view (not related to your specific situation but on the relevant components):

The short to medium term outlook for Australia is probably better than the UK (ie I'd rather have assets in AUD then GBP right now)

Many forecasts are saying that Melbourne property is reaching a peak, particularly in units - with an oversupply expected to hit the market in the next 12-18 months (but then Melbourne is growing, so tough to call)

Over the long term, equities generally outperform all other asset classes.

Equities or managed funds are a lot more liquid and less hassle than a property investment.

 

houses don't gain in value ???...

that's the moat ridiculous thing I have ever heard .

over time of course they do

on average the price doubles every 7-10 years .

yes there are peaks and troughs .

so a house in Dublin or London is the same price as it was in 1995 ????.

if you can ,hang on to the house ,its a no brainer

[Collie]

1 minute ago, bunbury61 said:

so a house in Dublin or London is the same price as it was in 1995

Again, are you a qualifed financial advisor?

Houses in Dublin are still 20-30% lower than they were in 2007 (a 10 year time frame), I have a reasonable knowledge of the Dublin market. 

$100k invested in Dublin/London property in 1995 would be worth less today than if it was invested in most managed funds.

[Guest The Pom Queen]

3 hours ago, Collie said:

Again, are you a qualifed financial advisor?
Houses in Dublin are still 20-30% lower than they were in 2007 (a 10 year time frame), I have a reasonable knowledge of the Dublin market. 
$100k invested in Dublin/London property in 1995 would be worth less today than if it was invested in most managed funds.

Why on earth does he have to be a "qualified financial advisor" to have an opinion. That would be like saying no one could reply to any posts on the forum unless we saw their qualifications. The OP hasn't asked for "professional" advice and I'm sure if he wanted that he wouldn't be asking here although @Andrew from Vista Financial on here is the person I would be chatting with but even a professional can't say how the property market is going to go.
If I had property in Melbourne I would definitely be hanging on to it. I wish we had kept on our property and investment property down there. In the few years we were there we made a good profit and the house we originally purchased when we arrived in Oz as doubled in value.
If the property was in Cairns or Townsville then I would be torn. We broke even when we sold up, actually we probably lost $50,000 on the Townsville one. We purchased the house in Townsville for less than they paid for it 5 years prior.

If I had money i would invest in property in Melbourne without a doubt.


Sent using Poms in Oz mobile app

[newjez]

3 hours ago, bunbury61 said:

houses don't gain in value ???...

that's the moat ridiculous thing I have ever heard .

over time of course they do

on average the price doubles every 7-10 years .

yes there are peaks and troughs .

so a house in Dublin or London is the same price as it was in 1995 ????.

if you can ,hang on to the house ,its a no brainer

Perth houses haven't gone up in ten years. 

[Collie]

2 hours ago, The Pom Queen said:

Why on earth does he have to be a "qualified financial advisor" to have an opinion. That would be like saying no one could reply to any posts on the forum unless we saw their qualifications. The OP hasn't asked for "professional" advice and I'm sure if he wanted that he wouldn't be asking here although @Andrew from Vista Financial on here is the person I would be chatting with but even a professional can't say how the property market is going to go.
If I had property in Melbourne I would definitely be hanging on to it. I wish we had kept on our property and investment property down there. In the few years we were there we made a good profit and the house we originally purchased when we arrived in Oz as doubled in value.
If the property was in Cairns or Townsville then I would be torn. We broke even when we sold up, actually we probably lost $50,000 on the Townsville one. We purchased the house in Townsville for less than they paid for it 5 years prior.

If I had money i would invest in property in Melbourne without a doubt.


Sent using Poms in Oz mobile app

Well Kate,

Legally, to give financial advice you are meant to be a qualified financial advisor.

Making off the cuff and factually incorrect statements such as "Property always goes up" is not really useful to the OP.  Also being made by somebody who (AFAIK) has no financial training and hasn't lived in Australia in quite a while is misleading.  I actually think stating your qualifications/experience helps.  There was another thread where 2 posters were advising a poster not to travel to Sydney, both live in the UK and have never lived in Sydney - how could they be possibly qualified to comment.

It is actually impossible to give financial advice to the OP with the information provided.  At a minimum, you would need to know:

His/her age, appitude for risk (both asset class and f/x), financial goals, other assets and liabilities (for diversification), whether the property would be positively or negatively geared etc.

It makes no financial sense to keep a negatively geared property in Australia if you are living overseas and have no other Australian income.

For most people, a property in a city like Melbourne would be a significant asset (probably their largest), hence why I suggested the OP get professional advice from a qualified professional who will take their overall financial position, risk profile etc into account.

Hope the health is going ok.

[Guest The Pom Queen]

9 minutes ago, Collie said:

Well Kate,

Legally, to give financial advice you are meant to be a qualified financial advisor.

Making off the cuff and factually incorrect statements such as "Property always goes up" is not really useful to the OP.  Also being made by somebody who (AFAIK) has no financial training and hasn't lived in Australia in quite a while is misleading.  I actually think stating your qualifications/experience helps.  There was another thread where 2 posters were advising a poster not to travel to Sydney, both live in the UK and have never lived in Sydney - how could they be possibly qualified to comment.

It is actually impossible to give financial advice to the OP with the information provided.  At a minimum, you would need to know:

His/her age, appitude for risk (both asset class and f/x), financial goals, other assets and liabilities (for diversification), whether the property would be positively or negatively geared etc.

It makes no financial sense to keep a negatively geared property in Australia if you are living overseas and have no other Australian income.

For most people, a property in a city like Melbourne would be a significant asset (probably their largest), hence why I suggested the OP get professional advice from a qualified professional who will take their overall financial position, risk profile etc into account.

Hope the health is going ok.

But do you not realise we live in the age of the internet where everyone is an armchair professional.

In regards to people who comment about an area they haven't lived in, of course they can post without being a professional in that area. It's like saying people can't post on the Brexit thread unless they are a politician. 

Please don't worry about it though myself and admin are more than happy for members to post on whatever subject/post/thread they wish without them submitting their degree certificates. I think life experiences can be of more value than a piece of paper.

Anyway as the OP asked for people's opinions can we get back on topic thank you.

@KTM1963 Alan Collet is great for tax advice 

@Andrew from Vista Financial Is great for pensions and financial matters.

Removals, after hearing one of the horror stories today I would look at using one of the major removalists, ie PSS, John Masons, Crown etc. 

It sounds like you made the best move going back. If you can't ever see yourself coming back the current exchange rate may actually work in your favour if you did decide to sell.

Good luck

[Parley]

@Collie just wondering where your got your financial planning licence also as you have given lots of financial advice here on lots of threads also.

I expect you are just as guilty of what you are accusing others of.

[Collie]

16 minutes ago, Parley said:

@Collie just wondering where your got your financial planning licence also as you have given lots of financial advice here on lots of threads also.

I expect you are just as guilty of what you are accusing others of.

I have never given anybody specific financial advice on this forum.  I couldn't do that without knowing a lot more about their specific circumstances, financial goals and attitude to risk.

I have made general comments about issues raised based on my qualified opinion.

With regards to my qualifications - I am a CPA and an ACMA/CGMA with over 20 years experience working in the Financial Services sector in Ireland and Australia.  Does that answer your question?

[Guest The Pom Queen]

2 minutes ago, Collie said:

I have never given anybody specific financial advice on this forum.  I couldn't do that without knowing a lot more about their specific circumstances, financial goals and attitude to risk.

I have made general comments about issues raised based on my qualified opinion.

 

So exactly the same as everyone else on the forum, you made general comments. 

 

[Collie]

6 minutes ago, The Pom Queen said:

So exactly the same as everyone else on the forum, you made general comments. 

 

No, some others make very specific comments - How can somebody living in the UK (for a long time), with no financial qualifications or knowledge (even a layman's knowledge or life experience) of the Melbourne property market possibly be qualified to comment on the OP's query?

I make sure I say that they are IMO and relate to general issue or qualify my opinion based on my experience.  I don't make stupid/factually incorrect statements like

"No brainer, property always goes up and doubles in value every 10 years"

or

"Don't go to Sydney" as 2 posters advised a young backpacker when neither one has ever lived there (both live in the UK btw and 1 only spent a year living in rural Queensland - How does that qualify one to give advice on living in Sydney.

Anyway - I think I may be hanging up my keyboard on this site (following some of the sensible posters)

Some of what is allowed to be posted in the Brexit thread and Chewing the fat is very distasteful with a strong undercurrent of racisim and facism.  I didn't realise that PIO was an outpost of the EDL.

I thought the purpose of the site was to offer help (based on appropriate life experience) to migrants looking to move to Australia around a range of relevant day to day issues.

 

[Guest The Pom Queen]

We can't advise you whether you should stay or go.

What I will say is this poor persons post is not there for you to try and score points or attack other members opinions.

As you say in your last sentence the site is about helping migrants whether they are moving to or from Australia. We don't ask members to provide their qualifications and life history before joining.  I also do not get involved in politics, nor do I care who is right or left wing. I work with the forum rules which have been in place for 14 years, if you don't like them and can't stick with them them I agree with you it may be less hassle for you to hang up that keyboard. 

Now this will be the last on the matter thank you. If you do wish to continue I suggest sending me a pm as per the forum rules.

[Phil & Vikki]

This is our opinion, we are not financial advisers, but this is what we are going to do. Please do not take this as gospel, but more the thoughts of someone else who is facing the same dilemma. Some may say the thoughts of a mad man, but our thoughts nerveless.

 

When we came to Australia, we had paid off our house in the UK. So renting it out was the logical option. After we brought it, it doubled in value in seven years and now it is worth around 120k more than when we brought it. The way we saw it was that we had an investment in the UK that would bring us in money and a place that we could go back to if we ever decided to return to the UK. On the whole we have had good tenants and it is nice to have the rent coming from it. So for us we have the rent every year and we still have the capital in the property.  

 

We brought a place in Sydney and in the four years that we have had it, it has virtually doubled in value. That growth is only set to continue with the new light rail links in the area we live in. So when we decided to go back to the UK, we considered both selling and renting. In the end we decided that the best way to go for us was to rent. Once again, this is only our thoughts and do not take this as any form of advice as we are not financially qualified to give anything of the sort. The reasons for us renting are:

• We like the idea that in retirement (we will have paid off the mortgage) the house in Sydney will give us a pension income.
• Like our place in the UK, we do not know if we will want to return in the future, so having a place to come back to will make it easier.
• If we sell (then decide to return later down the line) the chances of us getting a mortgage at our ages or being able to afford to buy in Sydney again will be very slim.
• With all the pain and cost of getting the visas, to only have seven years out here and go home with nothing (apart from money) seems a waist. This way we have the passports and have an investment for later.
• We and the kids all have Australian passports now, so in the future if the kids want to come back, they will have a place to stay. Keeping the property in Sydney if mainly for the kids in the future.
• On a selfish angle, we like the idea of being able to say that we have a holiday home/rental in Sydney J
• The rent (by the time we plan to leave) will cover the mortgage and other costs, so we should not have to add to it from the UK.

 So we have decided to keep it and put everything we earn into getting the mortgage repayments down. If things happen later in life that mean we need to sell it, we have that option. We will keep it as long as we can and keep on driving towards the end goal.

 

Funny enough, the three bedroom house that we have in the UK will not be big enough as there are now 5 of us, so we will have to look at buying a new house in the UK. Yes we could sell the Sydney one, take the money and get a really nice big house in the UK. However, that seems like a short term gain to us (not being financial advisers, just normal Joe’s). We are looking at the long term and every property we have known has gone up in value, so we are taking that into consideration too.

[Keith and Linda]

Phil & Vikki we also now have a house in each country with the plan to have a longer stay in the UK when I retire, the UK house has tenants at the moment but plan to make it a holiday rental thus making it more readily available for ourselves each year, Australia will be the home of residence and not yet sure if we will let this one as a holiday (make available for emigrating or ping pong poms), but also like you the UK home can be turned into  money later in life when unable to travel as often as we would like.

Good luck with everything.

[Guest The Pom Queen]

12 minutes ago, Phil & Vikki said:

This is our opinion, we are not financial advisers, but this is what we are going to do. Please do not take this as gospel, but more the thoughts of someone else who is facing the same dilemma. Some may say the thoughts of a mad man, but our thoughts nerveless.

 

When we came to Australia, we had paid off our house in the UK. So renting it out was the logical option. After we brought it, it doubled in value in seven years and now it is worth around 120k more than when we brought it. The way we saw it was that we had an investment in the UK that would bring us in money and a place that we could go back to if we ever decided to return to the UK. On the whole we have had good tenants and it is nice to have the rent coming from it. So for us we have the rent every year and we still have the capital in the property.  

 

We brought a place in Sydney and in the four years that we have had it, it has virtually doubled in value. That growth is only set to continue with the new light rail links in the area we live in. So when we decided to go back to the UK, we considered both selling and renting. In the end we decided that the best way to go for us was to rent. Once again, this is only our thoughts and do not take this as any form of advice as we are not financially qualified to give anything of the sort. The reasons for us renting are:

• We like the idea that in retirement (we will have paid off the mortgage) the house in Sydney will give us a pension income.
• Like our place in the UK, we do not know if we will want to return in the future, so having a place to come back to will make it easier.
• If we sell (then decide to return later down the line) the chances of us getting a mortgage at our ages or being able to afford to buy in Sydney again will be very slim.
• With all the pain and cost of getting the visas, to only have seven years out here and go home with nothing (apart from money) seems a waist. This way we have the passports and have an investment for later.
• We and the kids all have Australian passports now, so in the future if the kids want to come back, they will have a place to stay. Keeping the property in Sydney if mainly for the kids in the future.
• On a selfish angle, we like the idea of being able to say that we have a holiday home/rental in Sydney J
• The rent (by the time we plan to leave) will cover the mortgage and other costs, so we should not have to add to it from the UK.

 So we have decided to keep it and put everything we earn into getting the mortgage repayments down. If things happen later in life that mean we need to sell it, we have that option. We will keep it as long as we can and keep on driving towards the end goal.

 

Funny enough, the three bedroom house that we have in the UK will not be big enough as there are now 5 of us, so we will have to look at buying a new house in the UK. Yes we could sell the Sydney one, take the money and get a really nice big house in the UK. However, that seems like a short term gain to us (not being financial advisers, just normal Joe’s). We are looking at the long term and every property we have known has gone up in value, so we are taking that into consideration too.

It sounds a great plan @Phil & Vikki and I think if ever we returned back to the UK we would do similar although I don't think our property will gain that much over the years compared to Melbourne and Sydney

[newjez]

I think the posts above show how these decisions depend on individual circumstances.

If property just went up, we would all just keep buying property until we burst like a monopoly game.

Sometimes this is the best plan. Sometimes it is not.

It's depends on our individual circumstances and the current market.

[bunbury61]

22 hours ago, Collie said:

Again, are you a qualifed financial advisor?

Houses in Dublin are still 20-30% lower than they were in 2007 (a 10 year time frame), I have a reasonable knowledge of the Dublin market. 

$100k invested in Dublin/London property in 1995 would be worth less today than if it was invested in most managed funds.

houses gain in value , over the long term period .

or else we would still be paying 1974 prices .

how much was the average cost of a house in Perth in 1990 ?

what is it now ?

you don't ned to be a financial advisor to know that .

my house in the u.k doubled In value between 2003 and 2015 , which is about right .