Wallsender

Hi there everyone

We are flying out on 20th October, very excited about our new life in OZ.

We could not sell our house so we are renting, 6 months to begin with.

We will have to rent a house in Australia and this will cost I approximate 1200/1300 dollar per month. So this is more than we will receive from our UK rental.

We expect to get £675 per calendar month after management fees here in the UK, we are on an Interest only mortgage of BOE base rate + 0.29 we have a 102K mortgage, our repayment are very low around £70.

Can anyone advise me. should I go for the Oz option and fill out the tax exemption notice here in the UK, if we do will we be hammered by Oz for tax?

We are planning to come back in 5 /6 months we will use this to review our house rental and family visit. Can we claim airfares against rental tax we will pay out?

Please can anyone outline what we can and should claim for whilst in this situation.

many thanks

Ben

silver

As I understand it if you are Tax resident in Australia thats where your liability for the profit made lies and therefore gets paid to the ATO. Remember most renting related costs except repayments (not interest) count against your profit so if you need any work done its a good time. Also you need to fill out a NRL1 form to stop HMRC taxing the payments from your tenants.

I would have thought claiming airfares against your rental income was however stretching things a very long way (unless that is the sole purpose of the trip and the cost is seen as justified for something that needs doing), but this all really depends if the tax man decided to take a closer look into your accounts. If your accounts for renting fall outside they norm then you might be inviting a closer look too. But best pay for some professional advice if this is what you want to do.

Bermudashorts

You don't have options over this, you must adhere to the tax rules which do not give options.

Firstly the form you refer to is not about becoming exempt from UK tax it is about not having tax deducted at source which is very different matter and definitely you should do this as it is easier than claiming money back later.

You then need to declare the UK rental income on a UK tax return and assuming you are below the annual personal allowance you will not have a tax bill. The UK rental income also needs to be declared on the Australian tax return and if you did pay tax in the UK the amount paid will be deducted from your Australian bill.

What you pay in rent in Australia is irrelevant and no you cannot get tax deduction for your flights unless you can prove you flew in, viewed the house, flew straight home again and did nothing else during your trip.

Wallsender

thank you for your replies.

Ok step one...it's form NRL1 to stop the letting agency deduct the tax.

I'll pay what ever I owe in tax liability, if I have to pay something in the UK then it will be taken into account in Australia, that's sounds fair enough.

I'm also sure some proven expenses incurred during the letting process will be tax deductible against the profit.

thank you again