Tina Winchester

Has anyone moved to Australia and kept their house in the UK and rented it out? I am interested in any problems, firstly with any Tax on the monthly income, also does it affect buying another house in Oz ?
Are there any other things i should consider ?

h2oskineil

We are just in the process of renting our house out, we're off to Perth Jan 5th.
You will have to pay tax on the profits from the rental income, but all expenses are tax deductible. This will include any maintenance over the year, letting agents fee's and interest on the mortgage. If you own the house jointly with someone, you can split the profit 50/50 and use both your tax allowances.

Most agents around here (Peterborough) charge 13% =/- 1%. You can get a rental insurance, which as the name suggests will pay the rent should the tenant not pay (could be ill or loose their job etc.) This cost approx 3% of the monthly rental and in my humble opinion, is well worth it.
You can get a form called the NRL1 form, which allows the full income from the property to be paid direct to you and it's up to you (or your accountant) to fill out the tax return nd pay any tax, should any be due. If you don't fill out the NRL1 form, the rental agent has to deduct the tax and most are not willing to do this (Around here anyway).

You need to get permission from your mortgage company to rent out the house and have it in writing.
You need to get buildings insurance with public liability that will allow the house to be rented.
You need a landlord gas safety certificate which needs to be renewed annually. (British gas currently can't do one until mid January as they're so busy).
When you come to eventually sell the property, you need to look into Capital Gains tax, which I'm told is the amount of profit you have made from the time the property stopped becoming your primary residence to the date of the sale. An account will help you in that department.

We intend to use the rental income to buy flights back to the UK and not have to worry about buying them out of the Aussie income.

I'm sure there are many things I haven't thought about, I'll watch the replies to your post!
Neil.

CathnPaul

Hi Neil, I think you have certainly given us something to consider. Thanks for all the detail. It has certainly made us think about renting our house out.

moonstone

Hiya - we are have been in Sydney just over 3 months and due to the rental market being a bit slow where we were in the south - we ended up renting both of our properties out - so far so good, as was said you need to keep up with the building insurance and make sure you have yearly gas inspections done - but as for tax we have had letter from inland rev saying we were not being deducted tax from the rent. \

At the moment the little extra we are getting is coming in handy as its sooo expensive here in sydney, but we are going to put one of the places on the market next summer so taht we have a bit of capital to put towards a house here.

The councils are always a good bet to lease to as they guarantee rent for 4 years - check with your local authority.

Hope this is of help.

thribble

Hi,

We have rentors moving into our house a week today (not that you'd know it from looking at it!). I think my only tip would be to get a good agent, preferably one that will communicate via email, given the time differences. Ours is charging us 15% and we're paying 2.5% for the rental insurance mentioned. This doesn't cover the times its unlet, so make sure you can. A tip we've had is to make sure you can cover your years outgoings in 10 months rent, just in case.

The NRL forms are easy to fill out, and the government have a great site which goes into detail about the legal stuff in plain language (never thought I'd say that about a government site!!) I can't remember where it is, but I found it from google I think.

I guess the only other thing is to make sure you have a good inventory. As you'll be a long way away, you don't want to enter into long running disputes over things that can be planned for.

Good luck!

dh1905

Sorry to jump in on your thread,hope you dont mind, just have a similar type of question and hope someone can help...

Our house has been sold, and we are due to fly out in April :scared:
To cut a long story short we are thinking of buying a cheaper smaller house to rent out, not necessarily to make a profit on at the moment but as an investment for the future.
As this is a house we wont have lived in at all, does anyone know how we would stand regarding capital gains tax, and is there anything else that I should know about this type of thing? This is the 1st time we have ever considered doing anything like this

Thanks Donna x

CaliforniaBride

Have you thought about how you will manage the letting of the property?

dh1905

Hi,
We have had a letting agent recommended to us so hoping to use them. And maybe get a relative to be available should an emergency crop up, although hopefully that wont be too often!

CaliforniaBride

It's a huge headache however you do it.

If any emergencies crop up the letting agent will get someone that they use onto it. The charges are shocking. But you are stuck because you are not there to deal with it.

The other thing is you said you were planning to buy a smaller cheaper house. What sort of tenant will you be looking for? The house can determine the type of tenant you attract too.

martinw01908

Sorry if this sounds like a dumb question but so I am assuming that as a non uk resident you don't have to pay tax on the income, but to start with you must pay it and then claim it back later using the form?
I thought that if you only have one UK house you are not liable for CGT and especially as a non-UK resident you won't be liable in any case for CGT??

boom_meringue

oh if only.

No, if the house is not your main residence then you are liable for CGT and you are liable for income tax on the rent. As mentioned in the first post, if you fill in an NRL1 you can get your accountant to sort out the tax on the rental income at the end of the financial year

thribble

Our estate agent gave us the NRL - you need their reference number if you're doing it through an agency.

I'm no expert on this, but I found the hmrc websites helpful
http://www.hmrc.gov.uk/cgt/ is the Capital Gains Tax section.

Shaun&Dee

I had a property which I was going to rent out, instead I chose to sell as it worked out that I could get just as much in interest back after selling. Reasons that put me off renting were that everyone took a slice for this that and the other, namely:

* Mortgage company will charge you a 'buy to let interest rate' rather than what you are paying at present
* Home insurance doubled becuase me as the owner was not living there
* Needed insurance for non payment from the tennant
* Letting agent wanted one months rent finders fee (which assuming the tennant was changed say once every 1 - 1.5 years) (don't forget people will sign a 1 year agreement, but sometimes there are still get out clauses, so then not worthwhile, also what are you going to do if they break the lease? Find them and sue them?
* Had to obtain Corgi certificate on boiler service each and every year
* Had to maintain property, etc.

All of the above made it not financially viable for me.


DONNA
* I have a book (mail me with your e-mail address) and will send, which tells you all about CGT. If you have not lived at the property AT ALL, you will have to pay CGT on any profit. The way around it is to live there for a short while, rent out, then live there on your return for a short while, then sell. You can then totally avid CGT. (PS got this all from the book that I brought)
* Further complications if you then become a non UK resident, tax implications?

All of this assumes you do it the proper way.

Shaun