duckec01 Posted July 30, 2008 Share Posted July 30, 2008 Has anyone who is renting their uk home thought about increasing their mortgage in order to use the money to set up in Oz. I am thinking this may be a good idea for two reasons, firstly, because I am not selling and have no savings left, I need some money and as far as I am aware it is much cheaper to borrow in the UK at the moment. Secondly because you can offset the interest paid against the tax you have to pay on the property. It seems like a no-brainer to me but then I am not an expert. Any experience of or view on this? Link to comment Share on other sites More sharing options...
TheBrammies Posted July 30, 2008 Share Posted July 30, 2008 you can and to keep your payments down you can have an interest only mortgage as long as the rent covers your costs agent fee,mortgage,insurance then it could be a good option until house prices rise again in at least a few years time Link to comment Share on other sites More sharing options...
KazzE Posted July 30, 2008 Share Posted July 30, 2008 Yep, we were going to do this but we have just sold the house so don't need to now. if you have enough equity you should be able to do it, morgage lenders are looking for more than a 25% deposit, so I have been told. Link to comment Share on other sites More sharing options...
Guest AnnieE Posted August 19, 2008 Share Posted August 19, 2008 This is exactly what we have done. We have have now got a large interest only mortgage on our UK house and have put the £ in high interest savings accounts until the exchange rates improve and then we will move it out to Aus to buy a place. After talking to lots of mortgage lenders we decided to do this before we left the UK because they said although we would be able to do it from Aus we would have fewer lenders to choose from. We are lucky that at the moment the interest we are getting from the savings is higher than the interest we are paying on the mortgage. Link to comment Share on other sites More sharing options...
Mongrel Posted August 19, 2008 Share Posted August 19, 2008 This is exactly what we have done. We have have now got a large interest only mortgage on our UK house and have put the £ in high interest savings accounts until the exchange rates improve and then we will move it out to Aus to buy a place. After talking to lots of mortgage lenders we decided to do this before we left the UK because they said although we would be able to do it from Aus we would have fewer lenders to choose from. We are lucky that at the moment the interest we are getting from the savings is higher than the interest we are paying on the mortgage. I tbelieve you have to bring it over before 6 months or the oz tax man will hammer it Malx Link to comment Share on other sites More sharing options...
Guest Yorkshirefolk Posted August 20, 2008 Share Posted August 20, 2008 Hi ya, I'm also trying to rent uk house out .. although it will be at a loss.Can you only claim the interest element of mortgage on your oz tax bill or can you claim mortgage losses and management fees? What proof do you need to show the Oz tax man? and what's the issues with the 6 month deadline?Can you claim it on a 457 visa ? So many questions, sorry... don't know who else to ask!! This is my biggest headache in the Oz move so far!! Please Help!! Liz x. Link to comment Share on other sites More sharing options...
Guest Pinhead Posted August 20, 2008 Share Posted August 20, 2008 If you can get an interest only offset mortgage you can pay no tax or interest on the cash until you transfer the money. Link to comment Share on other sites More sharing options...
Guest Pinhead Posted August 20, 2008 Share Posted August 20, 2008 Hi ya,I'm also trying to rent uk house out .. although it will be at a loss.Can you only claim the interest element of mortgage on your oz tax bill or can you claim mortgage losses and management fees? What proof do you need to show the Oz tax man? and what's the issues with the 6 month deadline?Can you claim it on a 457 visa ? So many questions, sorry... don't know who else to ask!! This is my biggest headache in the Oz move so far!! Please Help!! Liz x. You pay tax on the profit assuming you make one. To calculate your profit/ loss take your gross rent & deduct EA fees, interest only part of your mortgage, repair expenses etc. Mortgage capital repayments can't be deducted so you need to get a split from your mortgage provider if you have a repayment mortgage. 6 month deadline refers to the exchange gain made on balances of $250K or more held in GBP 'non transactional' accounts. Link to comment Share on other sites More sharing options...
Guest Yorkshirefolk Posted August 20, 2008 Share Posted August 20, 2008 Cool!!! How much of the loss can you actually claim back? Liz Link to comment Share on other sites More sharing options...
Guest Jim Scott Posted August 26, 2008 Share Posted August 26, 2008 I would like to draw the attention of anyone reading this thread to the following forum/website; Let current house - remortgage for deposit on new house It's a bit dated, but does talk about the issue of remortgaging a UK home when it is to be rented out, and using that money to buy another home to live in, as well as some of the tax implications. I doubt that anything has changed tax wise since this debate occurred. My point is, beware of the risks and tax implications before embarking on this route:- As I understand it, the rent you receive is fully taxable income. It is only the interest on your mortgage which is deductable. i.e. - principal repayments are not deductable - interest on an equity release loan designed to raise cash for a deposit on a home either in UK or OZ, may not be deductable. - there are of course other tax benefits/deductions for maintenance and other expenses, but: The UK rules appear to be similar to OZ in relation to this issue. I recommend you speak to a professional tax adviser if you are in any doubt and be certain of the true "cashflow" implications. I'd hate to hear of anyone getting hit with a massive tax bill they were not expecting. In particular, do the numbers to check and see if you may be better to sell, and bring your equity tax free (even if less than you might have hoped) to end up with a smaller home loan in OZ as compared to having a small? original loan on your UK property that is tax deductable + an equity release loan that is not + the loan on the new OZ property. Note: I do not offer UK tax advice (or OZ tax advice for that matter!) If you do the numbers and you can still afford to keep the UK property - great. Best wishes all. Link to comment Share on other sites More sharing options...
Guest orangegerbera2003 Posted August 26, 2008 Share Posted August 26, 2008 Hi there. Have a look at these links which could help all of you wanting to remortgage: Can I rent out home to fund move to Australia? | This is Money Specific deductions: interest: withdrawal of capital from a business http://www.taxationweb.co.uk/forum/discuss.php?id=5965 Example 2 above (from the HMRC website) suggests that you are able to claim the interest payments on your UK tax (unless I have misinterpreted it). Have a read and see what you think. However, Australia seems to be very definite you can't take money out of a rental property to fund another property which you are going to live in: http://www.brisbanetimes.com.au/news/property/home-in-on-tax-lurk/2008/07/28/1217097144054.html So, my belief is that you would have to talk to an Australia tax adviser to see how that affects you at the end of the tax year here in Australia. If you lived in Australia, you couldn't claim the interest (on the part of the loan which you took out of the let property to fund a move to Australia) - however, there are other expenses which you can claim in Oz (such as depreciation on Capital works and assets in the property). So the two countries have different tax laws in this respect - so it is wise to really read up about it and see what you can claim and what you can't in both countries. It is all very complicated and I am no tax expert - but am always interested in learning the tax laws everywhere I live so am always looking around the web for answers. Best to get advice from an expert. All the best with your move! Link to comment Share on other sites More sharing options...
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