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renting out UK home


devon67

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Hi,

we are looking to rent out our UK home

so wondered what we need to do to make it legal

we know that we need

1. have landlords insurance

2. we will use an agent to look after it

3. it will be unfurnished

4. i have a local guy who can do any maintenance and decorating cheaper than agents bloke

5. neighbours will also keep an eye on it

 

but the main issue is tax of income

does anyone know the personal allowance total, and do we need to pay tax on any income we trasnfer over to OZ?

 

we have an interest only mortgage and i aint going to tell mortgage company they can go and shove it as been a landlord before and they just dont care as long as monthly payments are made

 

but main question is about tax, any help please

thanks

steve

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A lot depends on which visa you have.

 

For PR visa's the rental income (less any appropriate expenses) is taxable in Australia. From the Australian tax payable you may deduct any taxes paid in the UK.

 

The property is also subject to any capital gains tax in Australia when you sell it, or leave Australia. The Capital gains tax is based on the difference between the sales price (or value when you leave) less the value of the property when you arrive in Australia.

 

This is a four line answer and is non adequate for tax planning or return completion, but will give you an idea.

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we will be on a 175 visa

thanks for the help

hopefully we will only have a small amount of profit, after agent fees 8%, mortgage payments, maintenance etc so im not worried about it

just need to get it legal so we dont get into a pickle

cheers

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A lot depends on which visa you have.

 

For PR visa's the rental income (less any appropriate expenses) is taxable in Australia. From the Australian tax payable you may deduct any taxes paid in the UK.

 

The property is also subject to any capital gains tax in Australia when you sell it, or leave Australia. The Capital gains tax is based on the difference between the sales price (or value when you leave) less the value of the property when you arrive in Australia.

 

This is a four line answer and is non adequate for tax planning or return completion, but will give you an idea.

 

As you're on a PR visa the above applies

 

You might want to rethink telling/gaining the permission of your mortgage lender. By not doing so you are in breach of contract with them so if they find out you can get in a fair amount of strife, both with them and from your tenant (as your tenancy agreement won't have any basis in law)

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You have to get a buy to let mortgage, I wouldn't risk not telling your lender...

 

Besides landlord insurance you need a : -

Gas Safety certificate (annually)

PAT test

Electrical Installation inspection (annually)

Energy Performance certificate.

 

We are also looking into renting out our house if it doesn't sell very soon.. Very concerned about the probability that it may be empty for a month or 2 between tenants, who will pay the mortgage then?

 

The tax thing confuses me a bit, no a lot !!! How do you get exempt from paying tax??? The agent we have contacted, charge tax on the monthly rental so I'm sure that would be it, can't be expected to pay tax twice, surely!!!

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You need to complete a NRL1 to get an approval for rental income not to be deducted. Get that to your agent and they wont deduct tax at source in the UK.

 

You will have to complete a tax return in the UK each year and pay any taxes. You will also have to declare the rental profits in your Australian return. you can deduct any tax paid in the UK against any tax payable in Australia.

 

This is a 3 line answer and cannot be considered as full and adequate tax advise.

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You have to get a buy to let mortgage, I wouldn't risk not telling your lender...

 

Besides landlord insurance you need a : -

Gas Safety certificate (annually)

PAT test

Electrical Installation inspection (annually)

Energy Performance certificate.

 

We are also looking into renting out our house if it doesn't sell very soon.. Very concerned about the probability that it may be empty for a month or 2 between tenants, who will pay the mortgage then?

 

The tax thing confuses me a bit, no a lot !!! How do you get exempt from paying tax??? The agent we have contacted, charge tax on the monthly rental so I'm sure that would be it, can't be expected to pay tax twice, surely!!!

 

You don't necessarily need a buy to let mortgage. We have gained "consent to let" on our residential mortage. We paid £295 and keep our current mortgage and payments.

The Gas Certificate is definitely needed but I believe some of the other things you mentioned are recommended not law, so worth checking out.

 

We are getting an exemption from the tax taken out by the agent. I believe it's worth doing as you can then deduct your costs before the tax is taken out so you pay less in the end.

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You don't necessarily need a buy to let mortgage. We have gained "consent to let" on our residential mortage. We paid £295 and keep our current mortgage and payments.

The Gas Certificate is definitely needed but I believe some of the other things you mentioned are recommended not law, so worth checking out.

 

We are getting an exemption from the tax taken out by the agent. I believe it's worth doing as you can then deduct your costs before the tax is taken out so you pay less in the end.

 

 

Hi Alaska

 

Yes you are right, some lenders will give you a "consent to let", we are with Halifax, I will be calling them today to find out if we can do it this way as well. I had forgotten about that option. The management company that we are going to use if we do this, does require all the things I mentioned, but I suppose they don't all require the same stuff. :)

How do you get the exemption from the tax? Also then what costs can you deduct and how do you go about sorting out the tax when you are living in Australia?? Please help, I just don't understand the tax thing...

 

Thanx

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