Renting house in UK, doesn't cover the mortgage !!
 

Looking to move out to Aus during 08, and have had our house valued for rental

Mortgage £970 per month
Rental valuation £900 per month
Estate Agents cut 10% +VAT

So effectively we will be £170 down on mortgage payments.

I think i read somewhere about being to offset your tax against losses made.

Could someone explain how this works ?

Thanks

Stu

Re: Renting house in UK, doesn't cover the mortgage !!
 

Hi Stu

Have you thought of changing your mortgage payments to interest only and maybe that way the costs will be covered? This is what we will be doing with ours as like yourself we would be out of pocket.

Debbie

Re: Renting house in UK, doesn't cover the mortgage !!
 

You need to consider how you will pay the mortgage (and I believe coucil tax) in the months when the property is vacant, and also consider any running repairs. Depends on tenants, but some can be fickle.

Re: Renting house in UK, doesn't cover the mortgage !!
 

I will be in same boat but greater difference in between payment and income. I would be interested to hear if it can be offset somehow. I will have to have a good chat with the tax consultant when I get there!!

Re: Renting house in UK, doesn't cover the mortgage !!
 

We have also just changed ours to interest only and looking at it as a short term thing until either the house sells or we get settled in Oz financially. We were paying £760 repayment and interest only has saved us £200. It means we have a bit to build up in the kitty from renting it out. We are also going to take a 6 month mortgage break 6 months down the line to build up some money in case the house is empty..if we have to rent long term (worse case scenario). As soon as we can sell we will!

Re: Renting house in UK, doesn't cover the mortgage !!
 

Well we wanted to rent the house out for at least 4 years.
Our trip to Aus is based on a 457 Visa with a 4 year minimum commitment from ourselves. If we want to stay after that the job is permanent.
If thats the case we will probably sell the house.

Re: Renting house in UK, doesn't cover the mortgage !!
 

Well mine is for 3 years but the way I see it is that keeping the house enables us to return to the Uk with no issues with housing, if we sell and then come back we may not get back onto the housing ladder again in a decent area.
If things change and permanence becomes an option then we will look at it again, but our area is good for houses so the longer we can keep it the better the return of investment.

Re: Renting house in UK, doesn't cover the mortgage !!
 

Income from property letting is classed as unearned income and subject to tax, same as any other (share dividends, stocks, pensions, etc).

It balances out at the end of the year when you submit your tax return. You work the figures so you make an overall loss from the rental. You may get a tax rebate, but I would doubt it as I did this for 12+ years. You have to take the hit for the loss, knowing you are getting the majority of your mortgage paid and your property is (hopefully) increasing in its equitable value.

The profit comes when you sell it.

There are several associated costs of letting, so you should speak with someone who has been doing this for a while. You can claim for many things too, to ensure you make that loss.

Re: Renting house in UK, doesn't cover the mortgage !!
 

My intention is to leave it in UK to go towards my mortgage payments, that way its not a taxable income in Oz and also as a non domiciled home owner I pay zero tax in UK as well.

Re: Renting house in UK, doesn't cover the mortgage !!
 

It is taxable income in Australia. You are taxed on your worldwide income.

Re: Renting house in UK, doesn't cover the mortgage !!
 

Not on a temp 457 visa I am not

Re: Renting house in UK, doesn't cover the mortgage !!
 

You also need to take into account Landlord Insurance - ours is around 20 pound a month I think. We also kept our Life Insurances going in the UK and those are paid from our UK account too.

We changed our mortgage to interest only just so that there would be some sort of profit in it.

Re: Renting house in UK, doesn't cover the mortgage !!
 

We dont pay tax on the income from our UK property - we applied to the tax office, and because the profit it so minimal (below the annual threshold) its tax free.

Re: Renting house in UK, doesn't cover the mortgage !!
 

Are you sure about that?? You are treated no differently on a 457 Visa to any other Visa.......apart from the fact that you cant claim a lot of benefits. We came here on a 457 Visa and as far as I was aware ALL income was taxable (although obviously we decided our UK property wasn't :lol:).

Re: Renting house in UK, doesn't cover the mortgage !!
 

We also changed our mortgage to interest only and basically only just covered ourselves. We have not had a any tax issues (but then we were not making a profit). We have been totally honest in our returns with the tax office.

Our bank insisted that we could only have 6 month leases in place to continue on the existing mortgage, but that worked out fine with us.

We rented here for 2 years and have had no problems. We put the house up for sale in April and that is when all our problems started, our tenant moved out because she was worried she wouldn't find anywhere else and we could not get a new one as we would have had to sign a 6 month lease. The house has been empty since June, we have just sold but it is still in the processes and the amount of money we have lost on it is untrue - we are going to receive very little money form the sale now. Which we had budgeted on getting when we bought here with our huge temporary (:unsure:) mortgage - but hey such is life!

Sorry, had a bit of unloading to do there obviously - basically I just wanted to let you know where the pitfall for us was.

Endesleigh do a great landlords insurance.

Oh just another thought, we left our house in the hands of an agent and they were pretty pants, they failed to pay us twice and we had to hassle them for the money, also when we went back to the house in July last year, after the tenant had moved out the place was definitely not up to my idea of maintained - the tenant had used tbluetac on the walls and ripped the paper pulling stuff down, she had ahad a cable phone line instaled without our permission and they had used black wire all up the front of our white house, she had had token meters put in and had redecorated (not totally accurate!) one of the bedrooms, there was a line of cracked tile in the conservatory and the carpet up the stairs was absolutely filthy too - according to the agent that was all wear and tear and she got here deposit back:mad: Partly ruined our holiday having to deal with it all!

Nikki
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