Retainging a property in the UK

[Guest cmcmullan]

I am emigrating to Australia at the end of the month. I am going to retain my house in the UK and rent it out to pay off mortgage - hopefully make some profit.

 

I have been contacted by a financial advisor today who says:

 

1. By keeping my house in the UK I will be liable to pay tax for it in Australia. I should change my mortgage to Interest only for tax purposes.

2. When I sell my UK home, I will be liable to pay tax in Australia

 

Can anyone confirm if the above could/is true?

If for example I sell my house with £100k equity, how much tax am I liable to pay?

 

Thanks for any help your'e able to provide.

[Alan Collett]

My advice (and with all due respect to financial advisors): don't talk to a financial advisor about income tax or capital gains tax. Talk to a qualified tax accountant.

 

Horses for courses, and all that.

 

Re CGT: possibly payable, but it will depend on whether you own more than one property when you decide to sell; there is an exemption (for up to 6 years) for a previous main residence that is income generating in Australia.

 

Best regards.

[Don QuayPoly]

I am emigrating to Australia at the end of the month. I am going to retain my house in the UK and rent it out to pay off mortgage - hopefully make some profit.

 

I have been contacted by a financial advisor today who says:

 

1. By keeping my house in the UK I will be liable to pay tax for it in Australia. I should change my mortgage to Interest only for tax purposes.

2. When I sell my UK home, I will be liable to pay tax in Australia

 

Can anyone confirm if the above could/is true?

If for example I sell my house with £100k equity, how much tax am I liable to pay?

 

Thanks for any help your'e able to provide.

 

Hi, if you are on a permanent visa then you will be liable to pay tax on your rental income, you can still keep your mortgage as it is, but you will need to know how much of your repayments are interest, as this amount can be off-set against your rental income, other items can also be off-set such as agent fees and maintenance, so remember to keep your records of incomings and outgoings.

 

As for Capital Gains Tax when you sell your UK house, then you should be ok for 6 years UNLESS you have bought a house in Oz. If you do buy a house down-under then you have 6 months grace period to sell your other house. After this you are liable to CGT. How its worked out is a bit complicated so seek advice from a consultant.

 

I've only learned this from reading up and I'm no expert, but I hope it helps a little.

[Guest cmcmullan]

Thanks for the advice - We only own one property so I think it was a case of the advisor giving us the worst case scenario so that we would take up his servcies.

 

We've increased our mortgage term so that the majority of payment will be interest with only a small amount actually repaying the mortgage.

 

I think we're in a good enough state for moving over but we may need to find an accountant in Oz when we're planning to sell our house to ensure we record it properly on our tax return.

 

Thanks again

[Guest Impatient]

It is really good advice to see a tax specialist in either country. We all spend so much time chasing %5 savings or low mortgages and many of us forget that we are paying tax at 10, 20 &40% and being smart from a tax perspective is potentially more rewarding. This can all be done when you get to Oz - there is a period of grace for you to sort your finances.

 

For instance, lots of people worry about paying NI contributions to maintain their UK pension, when you actually have 6 years to start paying and can backdate 3 (roughly from memory, no-one shout at me!) - so if you are on an adventure and are not 100% you are staying, don't bother with NI for a while as if you return you will prob end up paying in more than the 30 years' worth you need for a full state pension.

[Alan Collett]

Thanks for the advice

 

<snip>

 

I think we're in a good enough state for moving over but we may need to find an accountant in Oz when we're planning to sell our house to ensure we record it properly on our tax return.

 

Thanks again

 

Shout out (or rather, feel able to contact me again) if you'd like a proposal as to costs for assisting with your Australian and/or UK Tax Returns - you can reach me via any of our offices in Australia.

 

Best regards.