Danny&Em Posted October 28, 2011 Share Posted October 28, 2011 Hello. Quick query which may pose more problems than is worth, but im not sure on the logisitics of the potential impact. When we move to Oz, we always planned on selling our house, exchanging it to $`s and using that money downunder. BUT.,., since our initial thoughts. The house asset rewards is only about £20K and the exchange rate is poor so wouldnt want to exchange it until I really had to. Savings we have, and can rely on for 6 months.,., maybe more. So, would it be viable for us to rent our house out. It would take more £ in rent than what i pay to the mortage. Whats happens tho if i do this, and i then land in OZ, do I have to declare this for taxing, or any other money related incidents i should be aware of.:policeman: Sell, or Rent??? Does it matter to OZ what i do? Cheers. Quote Link to comment Share on other sites More sharing options...
fleabo Posted October 28, 2011 Share Posted October 28, 2011 What visa you got? Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted October 28, 2011 Author Share Posted October 28, 2011 Hello, Our visa is a 176 [perm res] Quote Link to comment Share on other sites More sharing options...
zidden Posted October 28, 2011 Share Posted October 28, 2011 Australia has an International tax policy, think you may have to pay Australian Tax on any earnings or savings you have in the UK. Quote Link to comment Share on other sites More sharing options...
jamesnparry Posted October 28, 2011 Share Posted October 28, 2011 Hello. Quick query which may pose more problems than is worth, but im not sure on the logisitics of the potential impact. When we move to Oz, we always planned on selling our house, exchanging it to $`s and using that money downunder. BUT.,., since our initial thoughts. The house asset rewards is only about £20K and the exchange rate is poor so wouldnt want to exchange it until I really had to. Savings we have, and can rely on for 6 months.,., maybe more. So, would it be viable for us to rent our house out. It would take more £ in rent than what i pay to the mortage. Whats happens tho if i do this, and i then land in OZ, do I have to declare this for taxing, or any other money related incidents i should be aware of.:policeman: Sell, or Rent??? Does it matter to OZ what i do? Cheers. Hi, we look upon it from a different view...if we rent out our house(s) and try auz, if things do not work out, we can come back and still be on the property ladder, and no worse off.....if we stay in auz, then when the market is right sell the uk property to use as a depoist for auz house. in the mean time renting uk house, get a good agent, and if a garden have a gardener ( relative) to be in with the rental price, that way they can be your eyes on the ground, and raise any alarms bells to the agent or check on agent while your in auz..... agent fee's,insurance, interest on mortgage, repairs, decorating, carpets, new kitchen every 5 to 7 years, and bathroom ( to modest standard), and the odd call back and forth to uk all claimable against tax. Quote Link to comment Share on other sites More sharing options...
richselina Posted October 30, 2011 Share Posted October 30, 2011 Hi, There are a few things to consider as I'm going through the same dilemma. As soon as you move into a new house in Oz your Uk residence is no longer deemed as your primary residence and then the lovely capital gains tax comes into play onto a type of sliding scale. It's calculated on any gain from the purchase price to the sale value! Also, any gain on the rental income will be subject to tax, both domestic and international, but you can offset a lot of expenses against the income. I would get some quick advice from a local accountant to help you make a decision. Most accountants will give you some advice for free. I was originally going to rent, but now m selling as I don't feel comfortable renting out our house and being so far away especially with my equity tied up in it. Hope this helps. Quote Link to comment Share on other sites More sharing options...
mumoffour Posted October 30, 2011 Share Posted October 30, 2011 http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm Check this out re: CGT on sale of UK home when not living in it. We're currently having a similar dilemma - the exchange rate drop alone is giving me the heeby jeebies. Really worried that we're about 3 years late for this move! Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted October 31, 2011 Author Share Posted October 31, 2011 http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm Check this out re: CGT on sale of UK home when not living in it. We're currently having a similar dilemma - the exchange rate drop alone is giving me the heeby jeebies. Really worried that we're about 3 years late for this move! Agreed. I feel like weve kinda missed the boat.,., but will probably look back in ten years and say the opposite! (fingers crossed) The money released from the house once converted wont equate to much. Just need to suss out this tax malarky.,., both ends seem like a loosing battle, and it shouldnt given that ive worked so hard on it. I should work out the taxing of it. I dont think i`ll make much on it. But dont want to selll it for the sake of it. It could be my pension. Although a prev comment above hit home regarding the assests being rented out and becoming vunerable etc... Hmmmm Any tax gurus out there who could offer a clean cut stab at it?:GEEK: Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted October 31, 2011 Author Share Posted October 31, 2011 Hi, There are a few things to consider as I'm going through the same dilemma. As soon as you move into a new house in Oz your Uk residence is no longer deemed as your primary residence and then the lovely capital gains tax comes into play onto a type of sliding scale. It's calculated on any gain from the purchase price to the sale value! Also, any gain on the rental income will be subject to tax, both domestic and international, but you can offset a lot of expenses against the income. I would get some quick advice from a local accountant to help you make a decision. Most accountants will give you some advice for free. I was originally going to rent, but now m selling as I don't feel comfortable renting out our house and being so far away especially with my equity tied up in it. Hope this helps. Thanks for this info. I never knew it existed. But thats because ive never asked before. Ok.,., Ive read this.. http://www.hmrc.gov.uk/cgt/property/calc-cgt.htm Step 5: Apply tax reliefs If you've worked out that, so far, you've made a gain, there are tax reliefs that may reduce that gain. The following reliefs may be available: Private Residence Relief - if you sell or dispose of your own home - it usually means that you don't pay Capital Gains Tax on the gain you make But, [and reading between the lines] It wont be my `own home` as `you move into a new house in Oz your Uk residence is no longer deemed as your primary residence` BUT - when you say `move` - is this deemed as renting or buying? So... now i`m trying to find out how much Capital Tax pull my pants down and spank me rotten is in a %. term given the below basics. I`n not talking mega money, if sold at a realistic rate, I`d probably reep in £25k... exchanged at current rate $37,886 [approx] which is about the price of a t-bag over there. Hence my thinking of sitting it out a little and waiting for the market / dollar to adjust itself. Ant ideas folks? Quote Link to comment Share on other sites More sharing options...
silverbobby Posted October 31, 2011 Share Posted October 31, 2011 I did not know about the CGT if you end up selling once settled in Oz!? Also interesting to find out the there are tax liabilities on the profit from rent in both UK and Oz. We decided early on (2.5 years ago) that we would be better off selling our house, we have very little savings and i do not like the idea of renting it out when we are so far away, even with the help of a letting agent/family, too much of a headache. We have recently just accepted an offer, after 2.5 years of waiting, from a cash buyer and hopefully in 4-6 weeks we will be out. We don't have our visa yet but hopefully that will come some time in 2012. It is really frustrating how the exchange rate is right now, but i don't see things getting any better in the next 2-3 years. I think the UK housing market is not going to recover for 2-3 years and neither will the exchange rate. Houses in Australia will continue to grow in value and the Australian economy is not going to weaken, so if the UK housing did recover i doubt you will be any better off than you would be selling now. It's a real shame when you look back 10 years and people who emigrated to Oz were a lot better off from selling their UK homes and Australian housing being so much cheaper! Anyway all the best to anyone renting their property, i don't think it is an easy decision either way. Quote Link to comment Share on other sites More sharing options...
pintpot Posted October 31, 2011 Share Posted October 31, 2011 A lot of people get the wrong idea about Capital Gains Tax and how it affects you on sale of a house It's not like Stamp Duty or something, where once you cop for it, you cop for the full whack. You aren't liable for CGT at all for the period where a house was your Principal Private Residence, even if it isn't now Then on top of that you get an annual allowance before any CGT kicks in. Then there is taper relief (this is intended to allow for the effects of "normal" inflation, so the CGT is only taxing you for the excess (over inflation) unearned increase in a capital asset whilst you weren't living in it) This isn't as complicated as it sounds, but it boils down to CGT being very unlikely to being a big issue for you when you sell a house that was your PPR for many years Example: You bought a house 15 years ago for £100K. 3 years ago you moved to Australia, at which point the house as worth £250K. Now you are selling it for £275K Many will tell you you will cop for CGT@40% on £175K (the total increase in value), or, worse, the entire selling price of £275K. Not so. Whilst it was your PPR, you get 100% CGT relief. So the only capital gain you have to worry about is £275K-£250K = £25K. Then you can deduct from that £25K capital gain the annual allowance, which memory escapes me but I think it's about £8K per annum. If so, your liability is virtually nil, and with taper relief (ask an accountant) will be nil CGT is only really going to catch you out if you have a load of property that you are now selling, or you left the UK years and years ago. Which doesn't sound like anyone in this thread NOTE: I am talking about UK tax above. But Aussie tax works in a similar way, albeit the allowances etc are different Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted October 31, 2011 Author Share Posted October 31, 2011 Pintpot.,., cheers for the breakdown... Its a minefield for me right now. But because i`m not clued up on this.... Ok, So, if i rent my house for the next 25 years (this is the sugar coated version as you can probably tell), I dont expect to make much,,, if any £`s on it,,, but over that time, I will have paid off my english mortgage. So my house now stading at £100k,,, and in 25 years is now worth £200k (thanks to my immaginary inflation), it will leave me nicely with a Uk house which i could sell and use as my `pension`. 1 - Do I get tax whacked on this at the end [2036 for £100K or is it reduced due to annual allowance]? 2 - Do i get tax whacked during this? (I may profit £1,000 per year, but keep it uk bound for any potential matentaince issues etc.) 3 - I understand I may get taxed by Oz for item 2, nut surely it cant be much given that is peanuts. All pie in the sky, but given that the outcome is sell or rent my house..,., it time to get active. (As said before - i`m trying not to sell given the return) Thanks anyone who offers to help.,., (and please feel free to use and abuse me as an example) D&E Quote Link to comment Share on other sites More sharing options...
pintpot Posted October 31, 2011 Share Posted October 31, 2011 Bear with me for a couple of days (about to jump on a plane!) and I can give you the UK tax situation Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted October 31, 2011 Author Share Posted October 31, 2011 Bear with me for a couple of days (about to jump on a plane!) and I can give you the UK tax situation A couple of days on a plane!!! You going via NASA?? .,., ha.,., no worries. Cheers. Quote Link to comment Share on other sites More sharing options...
Guest Beth101 Posted November 1, 2011 Share Posted November 1, 2011 We thought the same as you, rent out our house in the UK and wait for the UK housing market to recover/exchange rate to get better before selling and transferring our money. However unless your rental income covers quite a bit more than your mortgage then it's probably not worth it as you will have other expenses - house insurance, any repairs, maintenace etc. Plus you need to factor in any time that the property may be unoccupied and not generating rent. Also remember if mortgage rates in the UK rise you'll mortgage will rise, but not your rent. Check with an accountant about CGT - there is a relief called Private Residence Relief which may help with the the tax when you sell, depending on how long you rent it out before selling. I'd check that with a tax accountant first though :wink: Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted November 1, 2011 Author Share Posted November 1, 2011 We thought the same as you, rent out our house in the UK and wait for the UK housing market to recover/exchange rate to get better before selling and transferring our money. However unless your rental income covers quite a bit more than your mortgage then it's probably not worth it as you will have other expenses - house insurance, any repairs, maintenace etc. Plus you need to factor in any time that the property may be unoccupied and not generating rent. Also remember if mortgage rates in the UK rise you'll mortgage will rise, but not your rent. Check with an accountant about CGT - there is a relief called Private Residence Relief which may help with the the tax when you sell, depending on how long you rent it out before selling. I'd check that with a tax accountant first though :wink: Agreed. Its such an armwrestle and wouldnt mind a crystal ball. (maybe the accountants have them at the plenty and read them instead of reading pomz in oz,, help us poorer sods out make the right call!).,., anyhow.,., Renting.,., our house is the std starter 2 up 2 down that we have decorated nicely. If we ever did come back we coulnt live in it due to expanding family etc. (were at the age of breeding) so the nippers wont fit in. We`de make approx £150/month all being well and would keep the money for associated costs in landlording a rental property sat in a bank acct. Might be for 5 years,,, might be for 10? With the rental market sooo strong and houses undercutting each other for a sell,,,,[as even on our street] we`d be almost giving it away and feel my hand is forced. A friend who loves to delve into the property market reads that were due for a double dip recession and that the situation is more or less as present for at least 5 years? I thinking of rent for as long as poss.,., I need a decent pension after all this!!! Thanks for your continued intrest folks.,., all input is welcomed and helps. :hug: Quote Link to comment Share on other sites More sharing options...
brightonbee Posted November 2, 2011 Share Posted November 2, 2011 Good move in today's economic climate. It never ceases to amaze me how Many immigrants burn their Uk bridges when there can be alternatives. Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted November 2, 2011 Share Posted November 2, 2011 See the FAQ schedule at http://www.gmtax.com.au ... Best regards. Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted November 2, 2011 Share Posted November 2, 2011 Remember also the opportunity to set off a UK rental loss against Aus income (including salaried income) if you are Aus resident and a permanent visaholder - ie not a temporary visaholder. This is termed "negative gearing" in Australia. Rental loss to be after mortgage interest, but repayments of capital on the mortgage loan are not deductible. Best regards. Quote Link to comment Share on other sites More sharing options...
Guest china Posted November 2, 2011 Share Posted November 2, 2011 It's such a difficult dilemma - we had thought we were going to rent but now I am panicking and think we should sell, as the rent would cover the mortgage just, and then with the agents' fees, landlords insurance etc we would be facing a loss of around £100 each month. It feels like we just can't win :-( good luck to everyone else trying to make their decisions!! Quote Link to comment Share on other sites More sharing options...
fleabo Posted November 3, 2011 Share Posted November 3, 2011 Sell your house. Quote Link to comment Share on other sites More sharing options...
Danny&Em Posted November 3, 2011 Author Share Posted November 3, 2011 Cheers all, Alan - I read your pages whilst sieving thro the net and simialar posts. Thanks for your page. Very useful. I just need to understand the other post. Remember also the opportunity to set off a UK rental loss against Aus income (including salaried income) if you are Aus resident and a permanent visaholder - ie not a temporary visaholder. This is termed "negative gearing" in Australia. Rental loss to be after mortgage interest, but repayments of capital on the mortgage loan are not deductible As for `sell your house` I really want to and wish i could,.,., but i`m afraid after all ive done to it and with other neighbours having a reduction price war.,.,., it would be more of a case of `give away your house`... Maybe I should sit on it for a few years.,. ,rent it.,., then sell it.,.,? even if a i break equal on the rent / repayments .,., the market may have increased and be in a better position to sell at a `normal rate`. I hope i`m making the right judgment, but still feel my hand is forced into the rental side of the equation. Unless the tax man get too busy? Which i still need to fully understand. Quote Link to comment Share on other sites More sharing options...
jamesnparry Posted November 3, 2011 Share Posted November 3, 2011 Cheers all,Alan - I read your pages whilst sieving thro the net and simialar posts. Thanks for your page. Very useful. I just need to understand the other post. Remember also the opportunity to set off a UK rental loss against Aus income (including salaried income) if you are Aus resident and a permanent visaholder - ie not a temporary visaholder. This is termed "negative gearing" in Australia. Rental loss to be after mortgage interest, but repayments of capital on the mortgage loan are not deductible As for `sell your house` I really want to and wish i could,.,., but i`m afraid after all ive done to it and with other neighbours having a reduction price war.,.,., it would be more of a case of `give away your house`... Maybe I should sit on it for a few years.,. ,rent it.,., then sell it.,.,? even if a i break equal on the rent / repayments .,., the market may have increased and be in a better position to sell at a `normal rate`. I hope i`m making the right judgment, but still feel my hand is forced into the rental side of the equation. Unless the tax man get too busy? Which i still need to fully understand. Hi I do think it is unwise to give the property away....we rent property and have done for over 10 years, and will continue to do so until we are settled in auz, we might decided to still keep things in uk, who knows.........like i said before, use it as a deposit on the house in auz when you find where you want to live there. pm me if you need any guidance on lettings, and what to do etc..... it is not hard regards Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted November 3, 2011 Share Posted November 3, 2011 I think the key - speaking as one who retains a property in the UK that is let - is to avoid having any void periods. Keep the property well maintained, and attractive to prospective tenants. Good luck! Quote Link to comment Share on other sites More sharing options...
jamesnparry Posted November 3, 2011 Share Posted November 3, 2011 I think the key - speaking as one who retains a property in the UK that is let - is to avoid having any void periods. Keep the property well maintained, and attractive to prospective tenants. Good luck! SPOT ON, it is like a car, you need to maintain it, other wise it cost alot more in the long run....... and remember it no longer is your home, but a business, and you need to make decision with that in mind. Quote Link to comment Share on other sites More sharing options...
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