Negative Gearing on 457 and UK House
Oct 6th 2006, 7:18 pm
#1
Forum Regular
Thread Starter
Joined: Jan 2006
Posts: 57
Negative Gearing on 457 and UK House
Repost after finding out about "Negative Gearing"
Does anyone know if this can apply to a UK house left behind when on a 457?
Cheers
I have an offer under consideration on a four year 457 visa which should also have LAFHA with it for a move to Perth and in doing all the sums at the moment the offer appears only to be worthwhile if I rent out my UK house. If we don't rent out the house through choice or lack of tenants or if it is rented out and there are breaks in the rental then I lose money and its therefore not a worthwhile offer. In addition we would like to come back to the UK once a year (family of 5) and would have those travel costs to meet as well
Does anyone know of any tax breaks to help here on both the house side and the travel side and whether anyone has experience of their employers offering solution for this type of issue such as paying your Oz property rental/flying you back home yearly.
Fell free to PM me on this and many thanks for any help
Does anyone know if this can apply to a UK house left behind when on a 457?
Cheers
I have an offer under consideration on a four year 457 visa which should also have LAFHA with it for a move to Perth and in doing all the sums at the moment the offer appears only to be worthwhile if I rent out my UK house. If we don't rent out the house through choice or lack of tenants or if it is rented out and there are breaks in the rental then I lose money and its therefore not a worthwhile offer. In addition we would like to come back to the UK once a year (family of 5) and would have those travel costs to meet as well
Does anyone know of any tax breaks to help here on both the house side and the travel side and whether anyone has experience of their employers offering solution for this type of issue such as paying your Oz property rental/flying you back home yearly.
Fell free to PM me on this and many thanks for any help
Oct 9th 2006, 5:26 am
#2
Karma Comedian
Joined: Feb 2003
Location: Brisvegas
Posts: 3,506
Re: Negative Gearing on 457 and UK House
You've asked a lot of questions and I think you need to do some proper thinking about this.
If you get LAFHA then theat means that a rental property in Oz will come out of your gross salary. Lets say your annual rent is $20,000 and your marginal tax rate would have been 42%, then you are saving $8,400.
This is to help 'compensate' for maintaining another (in this case UK) property. LAFHA also makes payments based on food costs etc. based on a formula.
All up LAFHA is likely to provide you with about $15,000 of additional net income than if you were not receiving it. If you are a lower rate taxpayer the saving is also lower.
If you have a UK house then clearly you need to meet the mortgage cost. You can do this yourself or leaseit to assist with that cost. In either case, your property should be appreciating in capital value anyway. Have you considered making your UK mortagge interest only (and trat it like an investment property) when you are away?
Few employers offer annual retrun flights. This is more likely if your offer is from your existing employer who wants to move you abroad for a period of time. Cost of a family of five returning to the UK is going to be about $12-15k flights alone. There are no tax breaks available for flights by any means I am aware of.
It is unlikely to be worth your while keeping your UK house empty just to spend two weeks in it on your annual holiday. I'd also be suprised if in reality you want to go back to the UK once a year.
Note that if you purchase any property in Oz you will immediately lose LAFHA.
You cannot use Australia's tax laws on negative gearing to apply to a property you own in the UK.
Bear in mind your employer is offering you an opportunity. It is not likely that they will compensate you for all the costs that you will or choose to incur as a result.
If you get LAFHA then theat means that a rental property in Oz will come out of your gross salary. Lets say your annual rent is $20,000 and your marginal tax rate would have been 42%, then you are saving $8,400.
This is to help 'compensate' for maintaining another (in this case UK) property. LAFHA also makes payments based on food costs etc. based on a formula.
All up LAFHA is likely to provide you with about $15,000 of additional net income than if you were not receiving it. If you are a lower rate taxpayer the saving is also lower.
If you have a UK house then clearly you need to meet the mortgage cost. You can do this yourself or leaseit to assist with that cost. In either case, your property should be appreciating in capital value anyway. Have you considered making your UK mortagge interest only (and trat it like an investment property) when you are away?
Few employers offer annual retrun flights. This is more likely if your offer is from your existing employer who wants to move you abroad for a period of time. Cost of a family of five returning to the UK is going to be about $12-15k flights alone. There are no tax breaks available for flights by any means I am aware of.
It is unlikely to be worth your while keeping your UK house empty just to spend two weeks in it on your annual holiday. I'd also be suprised if in reality you want to go back to the UK once a year.
Note that if you purchase any property in Oz you will immediately lose LAFHA.
You cannot use Australia's tax laws on negative gearing to apply to a property you own in the UK.
Bear in mind your employer is offering you an opportunity. It is not likely that they will compensate you for all the costs that you will or choose to incur as a result.
