Property Taxes - From AU to UK
 

Hi All,
bit of a complex one - I own property in AU,
currently live in UK
BUT , come april, Mortgage relief is fully removed...

who's in a similar situation RE tax? -
simplistically, it looks like i'll be paying 40% of the rental income in tax (which puts me 35% in the red against the mortgage)...

Re: Property Taxes - From AU to UK
 

Given the net rental income in Australia is likely to be taxed at non resident rates (no tax free threshold and first $ of rental income taxed at 32.5%) is the change in the deductibility of mortgage interest in the UK a material issue?

Remember also that in the UK you can claim a tax credit for the amount of the mortgage interest x 20%.

Agreed that in the UK tax relief at 40% or 45% on mortgage interest is no longer available.

Best regards.

Re: Property Taxes - From AU to UK
 

THANKYOU for your reply...

it won't be taxed in AU as it's less than the AU threshold anyway
from what I can make out t's being directly assesed as UK income it seems
i.e. if we have $10,000 AUD in rental income,
deduct $1k of management fees etc
pay 40% on the remaining $9K, so $3,600 directly to UK gov... (or 25% for lower tax bracket earners

But, there seems to be some oddities as to exactly what can be deducted!

Re: Property Taxes - From AU to UK
 

If you are not tax resident in Australia there's no tax free threshold available to you - you are subject to Aus tax on the first $ of your Aus property rental income (after deducting allowed expenses) at 32.5%.

You claim a foreign tax credit on your UK tax return for the tax paid to the ATO.

Best regards.