micged

Hi I was wondering if anyone could help us. we currently live in Oz and are likely to stay for many years yet. However with house prices so low in the UK at the moment we are thinking about buying a house back there for our retirement and renting it out until we need it. We would need to borrow money from the bank to do this. Has anyone done anything like this? Did you have to get a loan in the UK or can you get a mortage from an aussie bank. What are the tax implications? - do you pay tax in the uk on the rent etc or can it be negatively geared here in oz
any help or advise would be appreciated.
thanks
M

kaishang

- You cannot negatively gear overseas property and write off any losses against your Oz tax.
- You won't be able to get a loan off an Oz bank as the property is in a different legal juristiction.
- You will be able to get a loan off SOME UK banks but others will exclude you as you are not resident. I bought in the UK while non-resident in the UK through Cheltenham and Gloucester; most banks would not give me a loan.
- If you rent out in the UK and are non-UK-resident, the agent is supposed to automatically deduct the basic rate of tax. In practice you can get around this. IMHO the UK tax system is relatively disorganised, if you don't want to pay tax on your rent you probably won't have to.

Cape Blue

That is not quite true - you need to complete an NRL1 form to receive your rent gross.

Also you will likely retain your personal allowance in the UK, so provided the profit from letting (after mortgage interest, letting agents, insurance, 10% wear & tear etc etc) is less than circa GBP7K then you will not be paying any income tax in the UK - you will however have to declare the income in Aus.

markbhx

And if you make a loss on the rent the taxman will pay you. Bit like here :-)

killerhales

We live in Sydney and bought a house in the UK earlier this year.

We found it quite tricky to get a UK mortgage so went to an agent: ADS in Maidstone, Kent.

They found us a Halifax product. Had to do all the normal stuff: proof of earnings, outgoings, etc. There was a massive fee, but the interest rate is very competitive. You need a sizeable deposit too (20-25%).

Suggest you give the Halifax a call.

If you want to use ADS, we were charged GBP 549 altogether (200 on receipt of formal mortgage offer and 349 on completion). Whilst pricey, their service was actually very good.

Most of these fees are offsettable for tax purposes.

Good luck

hoofie2002

If you can put together a big enough deposit you will be able to get a loan although it's probably better to go through a specialist broker who can do the legwork for you.

One piece of advice - get a specialised lettings management company to run it for you as you obviously will not be able to manage it yourself and it just makes life easier. Also budget for redocoration/major repair every 5-10 years - we just had to spend $20k on our UK property as it was getting a bit tired and would have been hard to rent out again. If we were in the UK I could have shaved a lot of money off that cost but had no option but to let the management company take care of it. They did a good job but it was reflected in the price.

Swerv-o

I was under the impression that this had recently changed to allow you to negatively gear overseas properties?

Please somebody correct me if I am wrong...


S

killerhales

My understanding is that you CAN offset interest payments against any income as long as the property is genuinely available for rent.

I completed my latest tax return on that basis and it seemed very clear while filling it in that this was the case.

If I can find the relevant ATO link then I'll post it.

micged

Thank you all very much for your help. Any further advice is always appreciated!

Mr Kilt

We were buying a house in the UK while living in Brussels. We were put on the barclays international. They have a special unit exactly for this and you don't have to pay any agent fees. They are very helpfully etc. Highly recommended and pretty straightforward to.