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Guest alexfreeman

Australian Tax Return and my UK Property.. Advice needed

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Guest alexfreeman

Hi,

 

Im about to complete my first year in Oz and obviously I need to do a tax return here. I have a property I rent out in the UK that provides my a partial income into my Australian bank account. Is this something I need to declare here or would it be better to declare it under my allowance in the UK as a tax allowance??

 

What are other people doing? I am registered with the non resident landlord scheme in UK to receive my rent gross without tax deducted from my agent..

 

Many thanks

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We have to do a self assessment for the uk and also declare it with your end of year tax here. You can take off things like agents fees, ins, repairs, and if it's on a mortgage the capital, but not the interest.

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Alex,

Yes you do need to declare it to the Australian Tax office as it will be included on income you receive here, you can offset expenses mortgage interest, repairs, phone calls and other property related expenses. You will also have to complete a UK tax return if the inland revenue ask for it.

 

You will not have to pay anything to the UK if the income minus expenses comes to less than your UK Tax threshold(which you still retain), however if the income comes to more than this and you get a Tax bill from the UK you can then claim that back from any Australian Tax under double tax agreements.

 

Also if you sell the property down the track you will need to have a valuation based on the value in AUD on the day you landed here for Capital gains tax purposes.

 

From, experience I would always declare it as the angst caused by not declaring it is not worth the hassle. Also if it is held in joint names with a partner/spouse then the income will be divided this may again reduce any tax bill.

 

Best of Luck

 

PS MarknTracey

 

I think you mean you can deduct the interest payment on a mortgage not the capital repayments.

Edited by winter1

:confused:

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We have to do a self assessment for the uk and also declare it with your end of year tax here. You can take off things like agents fees, ins, repairs, and if it's on a mortgage the capital, but not the interest.

 

I'm starting to look into this myself and thought I would come here for some explanations in laymans terms which I could understand. I came across the following link http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027 with the part I was most interested in being that it states "interest on property loans". Now if I was to include this allowance from my mortgage this would near enough offset all of the rental income I have received in the past 9 months. So for a simpleton on tax matters I'm slightly confused :unsure:

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Hi Hippo,

I's not that confusing you only pay tax on the "Profit" so if your mortgage interest is around the same as the rent then there is little or no tax to pay.

Also as in Australia if you make a loss after all the expenses insurance, agent's fees, repairs etc you actually get an overall reduction in taxable income eg:

You make a loss of $2000 dollars on a property(this could be in the UK or Australia) and you earn a taxable income of $39000 (this is minus the tax free thresholds) in a job your taxable income will reduce to $37000. An Australian tax resident can offset overseas property from their take home pay.

 

I don't think that UK Tax residents can do the same I believe its only offset from the property income but I could be wrong.

See the following links. But as always take professional advice.

 

http://en.wikipedia.org/wiki/Negative_gearing_%28Australia%29

 

http://www.quinns.com.au/blog/2011/04/13/using-losses-on-overseas-investment-income-against-australian-incom


:confused:

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Hi Hippo,

I's not that confusing you only pay tax on the "Profit" so if your mortgage interest is around the same as the rent then there is little or no tax to pay.

Also as in Australia if you make a loss after all the expenses insurance, agent's fees, repairs etc you actually get an overall reduction in taxable income eg:

You make a loss of $2000 dollars on a property(this could be in the UK or Australia) and you earn a taxable income of $39000 (this is minus the tax free thresholds) in a job your taxable income will reduce to $37000. An Australian tax resident can offset overseas property from their take home pay.

 

I don't think that UK Tax residents can do the same I believe its only offset from the property income but I could be wrong.

See the following links. But as always take professional advice.

 

http://en.wikipedia.org/wiki/Negative_gearing_%28Australia%29

 

http://www.quinns.com.au/blog/2011/04/13/using-losses-on-overseas-investment-income-against-australian-incom

 

Yes in the UK tax deductible costs (mortgage interest, agents fees, repairs etc) can only be offset against the income to which they relate - hence if your property runs at a loss but you have other income you still have to pay the full (after allowances) tax on the other income. Negative gearing doesn't have the tax advantages in the UK that it has in Australia.

Edited by Ken

Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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Hi,

 

Im about to complete my first year in Oz and obviously I need to do a tax return here. I have a property I rent out in the UK that provides my a partial income into my Australian bank account. Is this something I need to declare here or would it be better to declare it under my allowance in the UK as a tax allowance??

 

What are other people doing? I am registered with the non resident landlord scheme in UK to receive my rent gross without tax deducted from my agent..

 

Many thanks

 

Hello Alex.

 

First question: what is your Australian visa status?

 

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

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Very interesting and useful info - thanks to all the posters.

 

Regarding getting relief for double taxation. Has anybody gone through this? Do you just submit a copy of your UK tax assessment with your Oz return?, just wondering how it works as I can imagine the Oz tax yr is not the same as UK tax yr.

 

In addition what documents do you have to submit in Oz with the return, in the UK we dont have to submit them. We just need to retain them in case they are asked for.

 

Thanks

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You simply claim the foreign tax offset for UK tax paid on the Aus tax return - assuming you are a permanent resident or Aus citizen who is resident in Australia for tax purposes.

 

Temporary visaholders are in a different position insofar as non Aus source income is concerned.

 

In case of need: http://www.gmtax.com.au/contact/

 

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

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