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rockola57

10 yrs here.Have our house in UK Rented out.

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Hi there.Well we have now been here 10 yrs.Could not sell our house in the UK,so rented it out.It has been a pain in the arse .Never made a carrot on it,loads of issues with bums renting it,or repairs and maintenance,bad agents not doing their job etc.Anyway,we have filled in our uk tax returns regularly ,are straight on that.However ,the mortgage has just finished,and we now  own it.What implications for us now,both there,and here in OZ ?We have to tell OzGov i think .

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Hey!! Remembered you from a few years ago, hope the 10 years have been good to you! I can’t advise but I can truly empathise, I still own a home in the UK and have had it trashed, poor agents etc, such a pain to deal with from so far away, I now have my sister living in it paying mortgage payments only (150 pound a month🤣) obviously the cheapest rental in the UK! We could clearly make significantly more from commercial renting but the the house is being very well looked after,  sister covers all ongoing maintenance issues and one day soon when the mortgage is paid off we will have a pretty nice nest egg to fall back on so watching your thread closely! I’m sure some one will come along soon with some great advice, all the best to you xx

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1 hour ago, rockola57 said:

Hi there.Well we have now been here 10 yrs.Could not sell our house in the UK,so rented it out.It has been a pain in the arse .Never made a carrot on it,loads of issues with bums renting it,or repairs and maintenance,bad agents not doing their job etc.Anyway,we have filled in our uk tax returns regularly ,are straight on that.However ,the mortgage has just finished,and we now  own it.What implications for us now,both there,and here in OZ ?We have to tell OzGov i think .

I hope you've also been declaring the income and expenses on your Australian tax return all these years, along with the UK tax paid?  Potential for big penalties if not.

Paying off the mortgage makes no difference as far as I'm aware, and you don't need to notify anyone in Australia that you've done so.  

If you eventually sell the property, you'll be liable for Capital Gains Tax in Australia, both on the profit you make on the sale, and any benefit you get from the changes in exchange rate.  

Edited by Marisawright

Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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38 minutes ago, Phoenix16 said:

 I now have my sister living in it paying mortgage payments only (150 pound a month🤣) obviously the cheapest rental in the UK! 

If you are leasing the property to a relative at a rent that's far below the commercial rate, then it may cost you in tax. You'll have to declare the income on your Australian tax return, but you may not be allowed to claim all the expenses.  

You really need an accountant who knows both Australian and British systems and they're very thin on the ground.  @Alan Collett is one. 

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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1 hour ago, Phoenix16 said:

Hey!! Remembered you from a few years ago, hope the 10 years have been good to you! I can’t advise but I can truly empathise, I still own a home in the UK and have had it trashed, poor agents etc, such a pain to deal with from so far away, I now have my sister living in it paying mortgage payments only (150 pound a month🤣) obviously the cheapest rental in the UK! We could clearly make significantly more from commercial renting but the the house is being very well looked after,  sister covers all ongoing maintenance issues and one day soon when the mortgage is paid off we will have a pretty nice nest egg to fall back on so watching your thread closely! I’m sure some one will come along soon with some great advice, all the best to you xx

Thank you Phoenix my friend.Much the same as us.Got nephew in there,paying sweet FA really.Not happy am i,but at least its not getting trashed.We still pay for all repairs etc though.Cant say too much,as family may read this.Anyway,getting worried about what famously greedy OZGov will want out of us over it ?Aswell as UKGov  !!Wish we had sold it sometimes...but then again ??

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You are supposed to register as an non resident landlord, and declare the rental income here.  We have done this for several years and now have to pay the tax in advance every quarter. Doesnt matter if you never made a profit, the rent is classed as income, you can offset agents fees, mortgage interest, maintenance costs etc

Edited by AJ

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17 minutes ago, rockola57 said:

Thank you Phoenix my friend.Much the same as us.Got nephew in there,paying sweet FA really.Not happy am i,but at least its not getting trashed.We still pay for all repairs etc though.Cant say too much,as family may read this.Anyway,getting worried about what famously greedy OZGov will want out of us over it ?Aswell as UKGov  !!Wish we had sold it sometimes...but then again ??

As AJ said, you should have registered as a non-resident landlord in the UK.   

As an Australian resident, you are liable to pay tax on all your income, no matter where in the world you earned it.  If you haven't declared your rental income for the last ten years, then you need to get onto it pronto.  We had someone else on these forums who hadn't been declaring their rent, and they were up for thousands in fines. 

Again, if it's a relative living in it, then you probably can't claim any of the expenses against your tax.   


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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1 hour ago, Marisawright said:

If you are leasing the property to a relative at a rent that's far below the commercial rate, then it may cost you in tax. You'll have to declare the income on your Australian tax return, but you may not be allowed to claim all the expenses.  

You really need an accountant who knows both Australian and British systems and they're very thin on the ground.  @Alan Collett is one. 

Love the assumption this is all being done without declaring it on the relevant tax returns 🤔, just for the record everything is all above board and properly declared to relevant tax authorities, I take advice from my accountant who has served me well so far but thank you for your concern xx

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2 minutes ago, Phoenix16 said:

Love the assumption this is all being done without declaring it on the relevant tax returns 🤔, just for the record everything is all above board and properly declared to relevant tax authorities, I take advice from my accountant who has served me well so far but thank you for your concern xx

Not assuming anything just making sure


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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17 hours ago, Marisawright said:

I hope you've also been declaring the income and expenses on your Australian tax return all these years, along with the UK tax paid?  Potential for big penalties if not.

Paying off the mortgage makes no difference as far as I'm aware, and you don't need to notify anyone in Australia that you've done so.  

If you eventually sell the property, you'll be liable for Capital Gains Tax in Australia, both on the profit you make on the sale, and any benefit you get from the changes in exchange rate.  

Will get advice on the above from our tax agent who is experienced on the tax rules between the 2 countries as this will affect us. There is a double tax agreement between UK and Oz so surely you can’t be taxed twice. Will post when have this checked out.mind you you can never win against the tax man!!!

 

Edited by ramot

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9 minutes ago, ramot said:

Will get advice on the above from our tax agent who is experienced on the tax rules between the 2 countries as this will affect us. There is a double tax agreement between UK and Oz so surely you can’t be taxed twice. Will post when have this checked out.mind you you can never win against the tax man!!!

 

You are absolutely right, you can’t be taxed twice, but it’s still an offence not to declare it. Also as tax rules are different in the two countries, and Australian residents  have to pay the Australian rate, sometimes what the British taxman took may fall a little short. 

Frankly it makes my head spin so it really is a good idea to get expert advice


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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8 minutes ago, ramot said:

Will get advice on the above from our tax agent who is experienced on the tax rules between the 2 countries as this will affect us. There is a double tax agreement between UK and Oz so surely you can’t be taxed twice. Will post when have this checked out.mind you you can never win against the tax man!!!

 

double taxation laws just means that you get a credit in one country for the tax already paid in the other, it doesn't mean Australia can't demand tax on uk income just because the uk tax due is paid. Three examples:

- director salary in the uk GBP8000 no uk tax to pay but if you have a job in Australia above the tax free threshold they will want 20% of the income (or so)

- type of income in the uk that (for example) is taxed at 10% but in Australia it is 30%. Australia give you credit for 10% already paid but still want the 20%..

- in the uk you can't cliam (much) interest deductions from rental income but in Australia its all the rage. So if you have a large mortgage in the uk you probably wont pay much tax in aus but if you have no mortgage .........

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12 minutes ago, can1983 said:

double taxation laws just means that you get a credit in one country for the tax already paid in the other, it doesn't mean Australia can't demand tax on uk income just because the uk tax due is paid. Three examples:

- director salary in the uk GBP8000 no uk tax to pay but if you have a job in Australia above the tax free threshold they will want 20% of the income (or so)

- type of income in the uk that (for example) is taxed at 10% but in Australia it is 30%. Australia give you credit for 10% already paid but still want the 20%..

- in the uk you can't cliam (much) interest deductions from rental income but in Australia its all the rage. So if you have a large mortgage in the uk you probably wont pay much tax in aus but if you have no mortgage .........

Thank you for your reply. At the moment we don’t pay tax in Australia. We are on a temporary long term visa and no income here. which will continue. 

However we are hopeful of PR shortly. so have already got a recommended tax agent. I know my husband is fairly up to speed, but on the above information as we have long term rental properties in UK will double check. Might have to sell quickly !!?  Properties are in both names, and if we sell before PR by my understanding the capital gains in UK are charged from the increase of the properties value since the valuation before the date the rules changed 2014 or 15? , can’t remember exact date, not from when originally purchased and then split between us? Hope that makes sense.

will double check everything.

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44 minutes ago, Marisawright said:

You are absolutely right, you can’t be taxed twice, but it’s still an offence not to declare it. Also as tax rules are different in the two countries, and Australian residents  have to pay the Australian rate, sometimes what the British taxman took may fall a little short. 

Frankly it makes my head spin so it really is a good idea to get expert advice

We have a recommended UK/Australian tax agent. Obviously an offence to not declare income if you are a resident here, we pay no tax in Australia all is taxed in UK, as temporary residents with no Australian income.  So need to make sure we are totally up to speed if our PR comes through. 

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37 minutes ago, ramot said:

Thank you for your reply. At the moment we don’t pay tax in Australia. We are on a temporary long term visa and no income here. which will continue. 

I thought that was the case, I just meant it as a general comment.

@Can1983 explains it very well.   It's not a straightforward "if you pay tax in one country, you pay nothing in the other".   It's the fact that (if you're an Australian resident), the Australian tax office will take into account any British tax you've already paid, or vice versa.  

 


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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14 minutes ago, Marisawright said:

I thought that was the case, I just meant it as a general comment.

@Can1983 explains it very well.   It's not a straightforward "if you pay tax in one country, you pay nothing in the other".   It's the fact that (if you're an Australian resident), the Australian tax office will take into account any British tax you've already paid, or vice versa.  

 

I meant that our only income will still come from UK in case that wasn’t clear, and do know that once we get PR we will be classed as tax residents in Australia.

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On 24/03/2019 at 19:55, Marisawright said:

 

If you eventually sell the property, you'll be liable for Capital Gains Tax in Australia, both on the profit you make on the sale, and any benefit you get from the changes in exchange rate.  

Received advice today from our tax agent, Reference the capital gains tax implications should we sell our rental properties after we hopefully gain PR. Different conditions apply if we sell before we get PR as offshore landlords, which are spelt out in our email, which we already knew. eg We had already acquired valuations prior to April 2015 and.If non UK residents the sale must be reported within 30 days etc.

If you have acquired PR by the time the property is sold It will be reportable in Australia, and the gain will be the difference between sales proceeds received (after expenses) and the value of the property at the date you become PR, each converted to Au$ at the relevant dates.

So the implication in our case is that capital gains we might have to pay won’t be that horrendous depending on how long we wait to sell, after we hopefully get PR.

the above advice should be correct as our agent is recommended as very knowledgeable on both UK and Australian tax situation. Obviously we know we will be taxed in Australia as soon as we have PR.

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1 hour ago, ramot said:

If you have acquired PR by the time the property is sold It will be reportable in Australia, and the gain will be the difference between sales proceeds received (after expenses) and the value of the property at the date you become PR, each converted to Au$ at the relevant dates.

That's good news.  I guess it might be worth paying to have a valuer value the property at the date you become PR, so there's no argument with the taxman over what it might have been worth on that date.


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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3 hours ago, Marisawright said:

That's good news.  I guess it might be worth paying to have a valuer value the property at the date you become PR, so there's no argument with the taxman over what it might have been worth on that date.

Already in hand thanks

Edited by ramot

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