Dentonburn

I understand that net rental income losses on UK property can be offset against salary earned in Australia when filling in a tax return in Australia each year.

How is rental income in the year of migration to Australia handled. IE if I moved to Australia on the 28th of February, are losses from March-June 2012 (only) to be utilised against my Australian salary at the 30th June 2012, or is the entire loss (or profit) from July 2011-June 2012 to be applied. What about losses carried forward into the UK tax year 2011/2012 from previous tax years?

Cheers

Kiwipaul

Yes your net rental income can be offset against your Oz income.

BUT

It all starts on the day you arrive and become liable for Oz tax. Any gains or losses prior to that are irreverent to the Oz tax man.

Bermudashorts

How are you making all these losses on rental income, considering the very low interest rate at the moment? My interest is £120 a month, on a £200k mortgage, which is a very good deal but even if it were several times that, it is still well below rental income. If I were not able to even cover the mortgage interest with rent I would be wondering if I were not charging enough rent.

Dentonburn

Long term fixed rate mortgate. Rental market is NE of England. Various other expenses floating about.

Don't you worry your head about it.

Grayling

Indeed....it is only the interest part of the mortgage against which allowances can be claimed.

I very much doubt that anyone would be letting a house out for less than their mortgage interest

Bermudashorts

Yes I expect the rents are much lower up there, but then the house would be too.

I'm not worried, just wondering at the business plan. There are a surprsing number of people who seem to think it is better to make losses and get a tax credit than make a profit and pay tax. Not suggesting that is you.

Turban Explorer

My buy to let mortgage is still charged at 4.75% interest only despite the base rate being 0.5% - haven't been able to shift it as I don't live in the UK.

Bermudashorts

Even if my mortgage were 4.75%, it would still be easily covered by rental income. I think it would need to be about 8% before I was not covering it. I am obviously a very savvy business woman.

Turban Explorer

You are indeed. My problem for getting stuck with a Northern Rock mortgage - lost 5k on shares during the nationalisation and stuck with a rip off interest only mortgage. Ah well... can't win 'em all.

Dentonburn

Our story is remarkably similar to your's Turban. (Even the Northern Rock shares bit).

The losses I refer for our property to are actually related to the first year of rental which had some large set-up costs. Electrical, front driveway repair, garden etc etc.

movingbacktoaus

Is your mortgage repayment or interest only? We are wondering what's best for us to do.

Kiwipaul

These would be considered capital costs and so not deductable against your oz income even if they occurred after you arrived in Oz.

Tr1boy

What would happen in the case of a house which was fully paid off and being rented out?

Grayling

Presumably you would have to pay Australian tax on all the rental income as there would be no interest charges to offset.

Kiwipaul

Can you depreciate property in UK. If so this would be a deduction against income in the uk.

If you cannot depreciate property in the UK can you use Oz dep rates against your UK income when you declare it in Oz.