Alienfeet

I intend renting out my house whilst moving to Brisbane.

My rent won't actually cover my monthly mortgage so I will have to top it up a little bit myself. As I'm not profiting from this does this mean I won't have to pay tax on it?

Cheers

Kelli28

Short answer yes you dont pay tax. Last time I looked you could earn up to 6k before paying tax although this figure may have changed since then.

slackbloke

Rental income is taxable but whether you actually have to pay tax will depend on a number factors like whether you have an interest only or repayment mortgage and the various allowances you can claim (for maintenance etc.).

rammygirl

You need to seek proper advice on this. Yes you do get an allowance in the UK so may not pay tax in UK.

But you still declare the income in Oz and may well pay tax on it (less any paid in UK)

Also depends what type of visa you are on temp residents have diff rules.

So everyones circumstances are not the same. If you cannot affiord an accountant then at least check with the Tax authorities in UK AND Oz

Gillianc

My understanding is that if you live in the UK and rent your house out then the interest part of your mortgage and other expenses involved with renting such as letting agent fees, house insurance etc can be taken off the the amount you receive in rent and then you are taxed on the rest. I don't know what happens if you are actually living in Aus but would be interested to know.

Turban Explorer

You declare yourself as a non resident landlord to hrmc and claim your threshold of 6k on your self assessment. As you are on a 457 and not a permanent resident the ATO doesn't have the right to tax you on overseas income.

Bermudashorts

The fact that your rental income does not cover the mortgage unfortunately does not mean you won't pay tax. My rent barely covered the mortgage most of last year, however I have a low interest rate and most of the mortgage is capital repayment which is not deductable for tax purposes so I expect I will pay a reasonable sum of tax. So firstly how your mortgage payment breaks down into interest and repayment is relevant.

You will still have the tax free allowance, however as you have worked in UK for part of the year I expect your employment earnings will absorb it.

If the house is in joint names then you split the rental income accordingly on each tax return and half the expenses.

Kiwipaul

Agree with rest of the replies.

If you can, switch to an interest only mortgage, that way all your interest payments are tax deductible. Also any expenses involved with maintaining the house are also tax deductible.

If you are still making a loss this loss is claimable against your Oz income (this changed 2008/09 tax year).

In Oz you can claim depreciation on contents and house not sure about a UK house where you don't have this concept (as far as I know).

Turban Explorer

You cannot claim a loss on a UK property to the ATO as a 457 temporary resident.

h2oskineil

You have to complete a NR1 form http://www.hmrc.gov.uk/cnr/nrl1.pdf
Without this form being submitted the agent looking after the property has to deduct the tax from the rental received.

NR1 Guidance notes.... http://www.sabbaticalhomes.co.uk/non...s_notes_bw.pdf

I had Landlord insurance.... strongly recommend as if your tenant looses their job, becomes ill and cannot pay the rent, the insurance will pay until you get a new tenant. http://www.letsure.co.uk/

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100% of your monthly rental income for up to 12 months or until vacant possession is achieved whichever happens sooner.
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Covers monthly rents up to £5,000 (higher amounts may be available on request)
Provides a legal service that will seek to evict your tenant for non-payment of rent.
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haggis supper

Not sure if the rules have changed since we rented (2006) but you can also claim "expenses" - property management fees, maintenance & repairs and anything else reasonable you can think of. We were able to include the cost to travel home once a year to inspect the property, postage, telephone and the use of a gardener to come in once a month. Those deductions took us below the taxable income threshold so we never paid any tax on the rented property.

Bermudashorts

You can include reasonable expenses, but I do not believe you should be able to claim travel home costs, not unless you flew home looked at the property and then left again.

haggis supper

I agree, but our accountant said including the cost of one flight per year was considered as acceptable. We included it and had no questions asked.


If I lived in the UK and rented out a property I would visit it annually to make sure all was ok. I would claim travel costs, so why not the cost from Australia ?

Turban Explorer

If it's a UK property I doubt you could claim costs encountered for travel outside of the UK - but hey ho - these things don't normally get checked out in great detail by the inefficient HRMC.

haggis supper

Frankly I was astonished but delighted to be able to claim it. At the end of the day it didn't make a huge difference and I kept a very clear email audit trail to show that I had been advised to claim it !