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Perez

Tax on rental income in UK

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Hi all,

 

I'm sure others will have been in the same position of moving to Oz and keeping hold of their home in the UK to rent out, so hopefully somebody will be able to answer these questions:

 

1) As a resident for tax purposes, do I need to pay tax on any rental income from UK property? If so, and I'm not making any money (i.e. income = same as interest payment), then I assume I don't pay income tax on that amount?

 

What if the income is used to make payments on a mortgage on that property and there's nothing left, so nothing to transfer to Oz?

 

2) What about UK tax?

 

On the form to declare you've left the UK you need to state what rental income you're getting - but there's no way to state what interest payments that income must cover. How can I make sure I don't get double taxed on this money?

 

3) If I bought another property in the UK but was making a loss on paper (negative gearing) would I be able to reduce my Australian tax liability since I'm a resident for tax purposes??

 

Thanks in advance!

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Guest Jackie Smith

Hi Perez

 

You will have to declare your rental income in the UK, but if there is no profit there will be no tax to pay. If you come to Oz as a PR you will also have to declare this income on your Oz return, but again if there is no profit there will be no tax. If the loan interest you pay means you make a loss, you can set this loss against your other Ozzy income - only if you are a PR. Remember to take into account only loan interest, not capital repayments when calculating your profit.

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Hi Perez

 

You will have to declare your rental income in the UK, but if there is no profit there will be no tax to pay. If you come to Oz as a PR you will also have to declare this income on your Oz return, but again if there is no profit there will be no tax. If the loan interest you pay means you make a loss, you can set this loss against your other Ozzy income - only if you are a PR. Remember to take into account only loan interest, not capital repayments when calculating your profit.

 

 

What if I make a small profit, but less than the UK tax threshold, so don't pay UK tax.

Do I still pay AU tax on the small profit?

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No, as you will have paid your tax (none to pay if you are within the allowance limit) when you do your UK tax return. As long as you are paying your tax in the UK and completing a return,even if it means there is nil to pay, you won't get taxed twice.

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What if I make a small profit, but less than the UK tax threshold, so don't pay UK tax.

Do I still pay AU tax on the small profit?

Hi Deborah this is an old thread and these members may no longer be on the forum. It may be worth starting a new thread in money.


If you are depressed you are living in the past. If you are anxious you are living in the future. If you are at peace you are living in the present.

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What if I make a small profit, but less than the UK tax threshold, so don't pay UK tax.

Do I still pay AU tax on the small profit?

 

It depends on your Australian income, the untaxed profit from the UK is considered part of your total Australian income for tax purposes.

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So I think the answer is .. yes.. I will get taxed in AU, even though I do not pay tax in the UK....

 

Does this work both ways.. if I make a loss on the UK rental (due to no tenant), can I deduct this from my AU taxable income?

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So I think the answer is .. yes.. I will get taxed in AU, even though I do not pay tax in the UK....

 

Does this work both ways.. if I make a loss on the UK rental (due to no tenant), can I deduct this from my AU taxable income?

I believe it does.


Has two beautiful Aussie little girls :-)

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So I think the answer is .. yes.. I will get taxed in AU, even though I do not pay tax in the UK....

 

Does this work both ways.. if I make a loss on the UK rental (due to no tenant), can I deduct this from my AU taxable income?

 

As the interest portion is the only deductible part of the mortgage repayment, your deduction is the same regardless of whether you have a tenant or not. You only have a additional tax assessable income when a tenant is paying you rent.

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What if I make a small profit, but less than the UK tax threshold, so don't pay UK tax.

Do I still pay AU tax on the small profit?

 

 

Yes you will pay tax in Australia if you don't pay in UK. The rental income should be declared on both tax returns, if you pay tax in the UK then this would be a credit on your Australian tax return thus reducing your Australian liability. If you didn't pay tax in the UK then this credit is zero, hence it is fully taxable in Australia. Unless you are below the personal allowances there as well of course.

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What if I make a small profit, but less than the UK tax threshold, so don't pay UK tax.

Do I still pay AU tax on the small profit?

 

Hi Deborah.

 

What type of visa do you have?

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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