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Tax on UK rental

Tax on UK rental

Old Jan 15th 2009, 10:47 am
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Default Tax on UK rental

Good morning England and Good evening Australia.
Sorry if this question has been asked before, but after doing a search I am still no wiser.
We, like many others are struggling to sell our house. We have decided to rent it out instead.
My question is, how much tax will we have to pay in Australia for doing this?
We will be charging £575 per month.

Thanks in anticipation of any replies.
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Old Jan 15th 2009, 11:01 am
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Default Re: Tax on UK rental

Originally Posted by grahampaula View Post
Good morning England and Good evening Australia.
Sorry if this question has been asked before, but after doing a search I am still no wiser.
We, like many others are struggling to sell our house. We have decided to rent it out instead.
My question is, how much tax will we have to pay in Australia for doing this?
We will be charging £575 per month.

Thanks in anticipation of any replies.
Hi there, long time no speak

You only pay tax on any gain you make. So say you pay charge $1000 rent, pay $500 mortgage and $200 Insurance your taxable gain would be $300 pounds per month, which would be added to your taxable income.

If you were to charge $1000 per month rent, pay $750 mortgage and $300 insurance you would be able to claim the $50 loss against your taxable income.

Of course, this is all really basic and I would suggest you speak to someone like Alan Collett who knows about tax in both the UK and Australia for some professional advice. Or wade through the UK tax site and the ATO site (some light reading for you http://www.hmrc.gov.uk/cnr/nr_landlords.htm )

Last edited by Wendy; Jan 15th 2009 at 11:11 am.
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Old Jan 15th 2009, 11:02 am
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Default Re: Tax on UK rental

Originally Posted by grahampaula View Post
Good morning England and Good evening Australia.
Sorry if this question has been asked before, but after doing a search I am still no wiser.
We, like many others are struggling to sell our house. We have decided to rent it out instead.
My question is, how much tax will we have to pay in Australia for doing this?
We will be charging £575 per month.

Thanks in anticipation of any replies.
We have been in the same position for two years now.

You will need to request Non-Resident Landlord status from HMRC (NRL1 form). You will still need to submit a UK tax Return each each and include ALL income from your rental and get your accountant to deduct all expense related to this rental as a tax deduction. You are likely to be under the tax threshold in the UK, but you will still need to submit it. Then you will need to submit a tax return in Australia and include this UK income in that too, however any tax you pay in the UK will be taken into account in Australia so you don't pay twice.

Hope this helps

Al
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Old Jan 15th 2009, 11:02 am
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Default Re: Tax on UK rental

Originally Posted by grahampaula View Post
Good morning England and Good evening Australia.
Sorry if this question has been asked before, but after doing a search I am still no wiser.
We, like many others are struggling to sell our house. We have decided to rent it out instead.
My question is, how much tax will we have to pay in Australia for doing this?
We will be charging £575 per month.

Thanks in anticipation of any replies.
Do you have a mortgage on the house, if so is it interest only, capital only or part interest/part capital.
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Old Jan 15th 2009, 11:11 am
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Default Re: Tax on UK rental

Originally Posted by TMRE View Post
Do you have a mortgage on the house, if so is it interest only, capital only or part interest/part capital.
Yep, worth changing to interest only as only the interest is considered when calculating deductions.

for the record HSBC did not require us to change to a "rental mortgage" or the like. All they required was to be informed, which we did in person during a meeting with the bank manager.
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Old Jan 15th 2009, 11:22 am
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Default Re: Tax on UK rental

Thanks for all the information.
(Hellllloooo Wendy, well I think we will be on our way in a few months, finally , but can't wait. I will do some reading soon, thanks for the link).

We are on interest only and the Building society have said that it is fine to rent. All we have to do is fill in a form and pay the £225 admin fee.
Makes a change for something to seem straight forward for a change, especially where tax is concerned!
All we need to do now is save up lots of pennies and we are on our way!
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Old Jan 15th 2009, 11:30 am
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Default Re: Tax on UK rental

Originally Posted by grahampaula View Post
Thanks for all the information.
(Hellllloooo Wendy, well I think we will be on our way in a few months, finally , but can't wait. I will do some reading soon, thanks for the link).
I admire your patience! I think I would have gone mental by now.

If you get a tax agent to help you with your first return (someone who knows both UK and Aus tax) you can deduct their fee from your taxable income the following year

And if you get a really good one, there probably won't be much tax to pay anyway - or you may even make a loss
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Old Jan 15th 2009, 11:46 am
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Default Re: Tax on UK rental

Originally Posted by Wendy View Post
I admire your patience! I think I would have gone mental by now.

If you get a tax agent to help you with your first return (someone who knows both UK and Aus tax) you can deduct their fee from your taxable income the following year

And if you get a really good one, there probably won't be much tax to pay anyway - or you may even make a loss
Sorry to sound thick, but I assume from reading this that we can do all of this from Oz then? Also, is it same as the UK when the returns are done at approximately the same time every year?
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Old Jan 15th 2009, 11:58 am
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Default Re: Tax on UK rental

Originally Posted by grahampaula View Post
Sorry to sound thick, but I assume from reading this that we can do all of this from Oz then? Also, is it same as the UK when the returns are done at approximately the same time every year?
Yes you can do it from here. Sounds like you may even have no tax to pay on yours. We make £7800 profit at present due to being on a mostly interest only, UK base rate +0.19% mortgage. Even then we will probably have only a couple $$$ dollars in tax to pay. We will be getting Alan Collett to do our first UK and OZ returns this year. Costs a few bucks but worth it for us being tax return virgins!.
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Old Jan 15th 2009, 12:00 pm
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Default Re: Tax on UK rental

Originally Posted by TMRE View Post
Yes you can do it from here. Sounds like you may even have no tax to pay on yours. We make £7800 profit at present due to being on a mostly interest only, UK base rate +0.19% mortgage. Even then we will probably have only a couple $$$ dollars in tax to pay. We will be getting Alan Collett to do our first UK and OZ returns this year. Costs a few bucks but worth it for us being tax return virgins!.

Just gonna add that the tax year ends on June 30th here
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Old Jan 15th 2009, 12:02 pm
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Default Re: Tax on UK rental

don't forget to claim for the flights back to check on your property
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Old Jan 15th 2009, 12:07 pm
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Default Re: Tax on UK rental

Originally Posted by asher View Post
don't forget to claim for the flights back to check on your property
Is that really a genuine cost you can claim?
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Old Jan 15th 2009, 12:10 pm
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Default Re: Tax on UK rental

Originally Posted by TMRE View Post
Yes you can do it from here. Sounds like you may even have no tax to pay on yours. We make £7800 profit at present due to being on a mostly interest only, UK base rate +0.19% mortgage. Even then we will probably have only a couple $$$ dollars in tax to pay. We will be getting Alan Collett to do our first UK and OZ returns this year. Costs a few bucks but worth it for us being tax return virgins!.
No tax would be wonderful, but we will definately get some professional help, thanks.
Originally Posted by Wendy View Post
Just gonna add that the tax year ends on June 30th here
Thanks, we might arrive just after that then to give us another year
Originally Posted by asher View Post
don't forget to claim for the flights back to check on your property

Even if we are not going back?
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Old Jan 15th 2009, 12:14 pm
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Default Re: Tax on UK rental

Originally Posted by asher View Post
don't forget to claim for the flights back to check on your property

Yeah...you need a GOOD tax agent for that sort of thing
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Old Jan 15th 2009, 12:21 pm
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Default Re: Tax on UK rental

Originally Posted by Wendy View Post
Yeah...you need a GOOD tax agent for that sort of thing
Alan will be busy earning his fee from us then
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