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oh my god tax is taxing - advice needed

oh my god tax is taxing - advice needed

Old Jul 3rd 2008, 5:03 pm
  #1  
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Default oh my god tax is taxing - advice needed

hello

as people who know us are aware, we are having to rent our property as we haven't sold:curse:
we have now decided to push things forward and get the house up for rent, i have researched the cost implications of doing this and feel really deflated. (thanks for the pick me up Fly Away)

firstly our mortgage lender is saying that we have to pay to rent our property out - either £100 or £250 depending on the time frame, then we will have to get landlords insurance, which okay i think is a good idea, but theres also the fact that we may have to pay tax as well.
can anyone give me any advice about this, as I have spoken to the EA about it and he doesnt seem any the wiser
at the moment i feel that we are sstuck between a rock and a hard place
i dont know anything about renting and tax, as i havent done it before, can anyone put my mind at ease and give me some advice.

thanks guys
bec
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Old Jul 3rd 2008, 5:05 pm
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Default Re: oh my god tax is taxing - advice needed

To really piss you off I'm sure you will have to tax in OZ for the rent income too.
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Old Jul 3rd 2008, 5:23 pm
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Default Re: oh my god tax is taxing - advice needed

Originally Posted by Cleopatra View Post
To really piss you off I'm sure you will have to tax in OZ for the rent income too.
great, i hadnt thought of that
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Old Jul 3rd 2008, 6:48 pm
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Default Re: oh my god tax is taxing - advice needed

Originally Posted by Cleopatra View Post
To really piss you off I'm sure you will have to tax in OZ for the rent income too.

The Uk and Australia have a reciprocal tax arrangement which means that you only pay tax once.
The best thing you can do is find a good small business accountant and get him to tell you the best/worst. They're generally quite cheap for advice.... depending on where you are... I paid £30 for some advice a few years ago.
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Old Jul 3rd 2008, 7:03 pm
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Default Re: oh my god tax is taxing - advice needed

I believe you only get taxed on profit you make. Our mortgage is more than we will make in rent so I dont believe we will have to pay any tax.

You can also claim for landlord insurance. www.hmrc.gov.uk has most answers. You will have to do a self assessment yearly. Also you need to register with them as a non resident landlord to avoid your rent having tax deducted by either an agent or tenant. You can also get info on this from the above mentioned website.

Jo

I am no expert just going through the motions for the first time.
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Old Jul 3rd 2008, 7:10 pm
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Default Re: oh my god tax is taxing - advice needed

Australian residents are liable for Australian tax on any rental income from the UK......unless on a temporary (457) visa.

You can claim for some expenses to be offset against tax but the rental income must be declared first and then any offsets claimed.

You can not claim all your mortgage payments as tax deductible....get professional advice.

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Old Jul 3rd 2008, 7:42 pm
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Default Re: oh my god tax is taxing - advice needed

Originally Posted by egghead4 View Post
hello

as people who know us are aware, we are having to rent our property as we haven't sold:curse:
we have now decided to push things forward and get the house up for rent, i have researched the cost implications of doing this and feel really deflated. (thanks for the pick me up Fly Away)

firstly our mortgage lender is saying that we have to pay to rent our property out - either £100 or £250 depending on the time frame, then we will have to get landlords insurance, which okay i think is a good idea, but theres also the fact that we may have to pay tax as well.
can anyone give me any advice about this, as I have spoken to the EA about it and he doesnt seem any the wiser
at the moment i feel that we are sstuck between a rock and a hard place
i dont know anything about renting and tax, as i havent done it before, can anyone put my mind at ease and give me some advice.

thanks guys
bec
As most posts state if you are on a 457 visa then you will be a non resident landlord, and will be required to complete form NRL1 if you are to receive rental income on a gross basis. As a temporary tax resident your net rental income from the UK is not subject to tax in Australia.

If however you are on a PR then any income made worldwide is subject to tax in Australia, but only in Australia and should not be taxed both in the UK and Australia.

I am going through the same process at the moment where I am going to Melbourne on the 23rd July on a 457 visa and renting my UK property.

Thanks

Gary
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Old Jul 3rd 2008, 8:14 pm
  #8  
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Default Re: oh my god tax is taxing - advice needed

thanks for all your responses, its nice to hear that other people are in the same position
i will make an appointment with an accountant and see what happens.
thanks bec
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Old Jul 4th 2008, 6:37 am
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Default Re: oh my god tax is taxing - advice needed

Originally Posted by Gary White View Post
As most posts state if you are on a 457 visa then you will be a non resident landlord, and will be required to complete form NRL1 if you are to receive rental income on a gross basis. As a temporary tax resident your net rental income from the UK is not subject to tax in Australia.

If however you are on a PR then any income made worldwide is subject to tax in Australia, but only in Australia and should not be taxed both in the UK and Australia.

I am going through the same process at the moment where I am going to Melbourne on the 23rd July on a 457 visa and renting my UK property.

Thanks

Gary
That is something I didnt know. We are australian citizens well dual and will be leaving the UK to live back in Oz. We were lead to believe that we had to pay tax on our rental income in the UK. Not that we make any money we have to top it up by over £300 a month. It would be much easier to declare it on one tax return rather than having to do two seperate ones.

Think I need to speak to the tax office here before we go.

Jo
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Old Jul 4th 2008, 7:45 am
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Default Re: oh my god tax is taxing - advice needed

Hi,

In the UK you will have to pay tax on your rental income.

The taxable amount will be the rent that you receive minus allowable expenses. You can claim insurance, gas check etc as an expense but NOT THE FULL AMOUNT OF YOUR MORTGAGE!! This is where many people come unstuck.

You can only claim the interest element of the mortgage as an expense. For example if your monthly repayments are £400 and the interest included in that is £100 you can only claim £100 as an expense.

Other expenses you might be able to claim will depend on if the house is let furnished or unfurnished (furnished does not have to be fully stocked with everything though, just some stuff).

Also, I would not recommend seeing an accountant if its a fairly straightforward letting. You can get this advice for free from the tax office, and it is all on their web site. However, I would not advise you to phone them for advice, better to make an appointment at a local tax office.

Finally, never let your house through an estate agent, always go to a specialist letting company. A reputable one will probably be able to give you some sort of pack explaining your obligations etc.

Hope this helps,
Ren

Last edited by RenShen; Jul 4th 2008 at 7:47 am.
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Old Jul 4th 2008, 7:51 am
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Default Re: oh my god tax is taxing - advice needed

Originally Posted by RenShen View Post
Hi,

In the UK you will have to pay tax on your rental income.

The taxable amount will be the rent that you receive minus allowable expenses. You can claim insurance, gas check etc as an expense but NOT THE FULL AMOUNT OF YOUR MORTGAGE!! This is where many people come unstuck.

You can only claim the interest element of the mortgage as an expense. For example if your monthly repayments are £400 and the interest included in that is £100 you can only claim £100 as an expense.

Other expenses you might be able to claim will depend on if the house is let furnished or unfurnished (furnished does not have to be fully stocked with everything though, just some stuff).

Also, I would not recommend seeing an accountant if its a fairly straightforward letting. You can get this advice for free from the tax office, and it is all on their web site. However, I would not advise you to phone them for advice, better to make an appointment at a local tax office.

Finally, never let your house through an estate agent, always go to a specialist letting company. A reputable one will probably be able to give you some sort of pack explaining your obligations etc.

Hope this helps,
Ren

If you are an Australian resident you have to pay tax in Australia on the rental income.

There is a double taxation agreement between the UK and Australia which means you only have to pay tax in Australia and arrange the rent to be free of UK tax.

Get professional advice.

G
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