Question about tax on rental income on property in uk
 

Hi there, my first post.

There is a chance my husband may be offered a job in Perth, though we won't know for a while.

In the meantime I'm planning what will happen if he gets the job as they want him out there quickly if he is successful.

We would probably rent in Perth for the first year before commiting to a house and rent out our uk home.

I am wondering if your in Australia how does tax work on income you receive from Britain? Is it best it goes it to a British account or an Australian one?

Please excuse my naivety! Many thanks

Re: Question about tax on rental income on property in uk
 

When I was living in Australia I was renting my place in London out and this is what I did.

I applied to the inland revenue to be a non resident landlord so you do not get taxed at source i.e. you don't pay tax in the UK.

The rental income was paid into my UK account.

I declared it to the Australian tax office and made appropriate deductions i.e. mortgage interest management fees maintenance etc.

It was pretty simple to manage and I would recommend getting an recommended estate agent to manage the property for you as it removes some of the work.

Re: Question about tax on rental income on property in uk
 

Thanks! So if I didn't declare I was a non resident landlrd I might get taxed twice? In Britain and Australia?

What if went straight into an Australian account?

Sounds very complicated....

Re: Question about tax on rental income on property in uk
 

No you would state the tax paid in the uk on your tax return there is a tax agreement between uk and aus so you don't get double taxed

You would probably have to worry about currency exchange fees etc. I didn't do it so I don't know.

Re: Question about tax on rental income on property in uk
 

Where the rental income is paid to is completely irrelevant for determining tax treatment.

Re: Question about tax on rental income on property in uk
 

Thanks everyone and great advice. Seems quite straight forward now I have re read it.

Re: Question about tax on rental income on property in uk
 

Can you depreciate the building and fitting of a property in UK when you submit you Oz tax return. As far as I know you cannot depreciate a residential building or it's fixtures in the UK for tax purposes.

I've asked this a number of time of various people and never got a straight answer. I even contacted the ATO by phone and the reply I got was they could not give me tax advise unless I submitted it in writing and obtained a ruling.

I'm sure a lot of members of this forum have a uk property that they rent but do you depreciate to reduce you Oz tax laibility.

Re: Question about tax on rental income on property in uk
 

I raised this issue with my accountant this year and this was their advice:

Yes, you are correct that you can claim a deduction for what is known as ‘capital works’.

Please see a couple of links from the ATO website about it (not sure if this is what you were reading on the weekend).
http://www.ato.gov.au/individuals/co...14.htm&page=10
http://www.ato.gov.au/individuals/co...t/00183243.htm

This type of deduction is usually popular for a new home as it is easier to get a valuation of the cost of construction – I am not sure whether you purchased this property as new??

On top of this (if you did not build the house or buy as new) you need to speak to all past owners and determine if they have claimed a capital works deduction in the past – as you can only claim the ‘undeducted construction cost’.

The other issue with claiming a capital works deduction is that it reduces your overall cost base of the property therefore increasing your capital gain once you sell it.

It is a very beneficial deduction when appropriate though.

Our property is Victorian and we certainly have not owned since new;) In addition I have no idea how to contact previous owners. Therefore it all became a mute point.

HTH

Re: Question about tax on rental income on property in uk
 

Just wanted to add that you don't have to declare your worldwide income on your Oz tax return if you're on a 457 temp visa, you are only liable to pay tax in Oz for it if you become permanant residents

Re: Question about tax on rental income on property in uk
 

Thank you carzinoz, that's good to know

I'm not sure what visa will apply to us yet, if the job is offered and favourable

Re: Question about tax on rental income on property in uk
 

OK in your case you could not depreciate the house as it has to have been built since 1987 (not 1887 :) ) but your accountant seems to be implying that you can use Oz dep rules to depreciate a house that is in a foreign country using Oz dep rules.

But you could dep the fixtures and fitting, carpets, central heating system, curtains, fitted kitchen which can be significant as they have a much shorter live time.

Thanks for the info.

The links didn't refer to houses abroad (not that I could see) just the rules that appy in Oz for Oz homes.

Re: Question about tax on rental income on property in uk
 

Well our accountants are certainly aware that the property is in London and they didnt point out that the rules do not apply to foreign properties.

I dont claim depn on other items as I dont claim it in UK. I claim outright deduction for replacement items and replicate in Oz ITR.

HTH

Re: Question about tax on rental income on property in uk
 

To my knowledge, the non-resident landlord status (NRL1 form) stops the tenant or letting agent having to deduct 20% tax at source, but you are still liable for UK tax via the normal UK self-assessment process - i.e. you DO pay tax in the UK if you profit is sufficiently high.

Re: Question about tax on rental income on property in uk
 

It depends on what type of visa you are on. Temporary or permanent? Ah sorry - just read that above. Temporary is easier for overseas property.

Re: Question about tax on rental income on property in uk
 

+1

We did NRL1 and still do self assesment tax form in UK. No tax due anyway as falls within personal allowance limits.

Also have to declare in Oz since went PR.

So, we don't pay any UK tax but as this income is added to any wages earned in Oz it becomes part of our taxable income here and is taxed at same rate as wages.