Good News for Those Letting UK Property With a Mortgage
 

The Governments of the UK and Australia have presented the new Double Tax Treaty between the two countries.

I'll be summarising the main issues on the Go Matilda website in the next few days, but in the meantime, and as it has been mentioned several times in the past, I thought I'd mention that it appears the withholding tax provisions affecting those who are resident in Australia paying mortgage interest to a UK lender will cease to have effect from the 1st of July 2004 - assuming the Treaty clears Parliamentary procedure in both countries (which it should).

By way of background, at the moment if you move to Australia and retain a UK property on which you have a mortgage you have an exposure to Withholding Tax equal to 10% of the interest. You can apply to the UK bank or building society to reduce the mortgage interest payment by 10% (as technically the lender can recover the 10% tax from the Inland Revenue), but most UK lenders are far from inclined to get involved, as it simply is too much aggravation for them => you have to pay the full amount of interest to the UK lender plus the 10% withholding tax to the Australian Taxation Office.

This procedure (which I dare say is honoured more in the breach) should cease as from the start of July next year.

Best regards.

House in uk
 

Hi,
Can you explain a bit further please.
I will be leaving for Aus Jan 2004. We want to rent our house for 2 yrs just in case we dont settle. I have a mortgage on the property & hope to keep up the mortgage with the rental payments. Am i liable for Tax to the Aus government? & what is this 10% agreement all about. Sorry but can't grasp it!!

Re: House in uk
 

Have a look at the attached factsheet, and please feel able to email me if you think you will need some specific advice.

Best regards.