Mrs Jackaroo

Hi Guys

Hubby has an interview for RAAF Richmond in the UK in two weeks and we are trying to way up what we would do if he was to be offered a position. We really don't want to lose our UK property and so would love to let it, but we need to know exactly what costs are incurred through doing this - insurance, tax etc? Our mortgage would be slightly less than the rental income (about £40) so it really doesn't leave us a lot for agents fees etc.

If anyone is letting their property and could offer advice I would really appreciate it. I know we are being slightly premature here as he hasn't even been offered a job yet but having all the facts and figures early on will really help if and when he is! (ever the optimist!!).

Cheers

Ty!

peppi

Not sure EXACTLY how it works...but I do know I was put off this because you apparently get taxed in UK and Oz on it...It all seemed far to complicated for me to be arsed with

Mrs Jackaroo

Thanks for the reply! This is where my concern lies! Yes we would love to keep hold of this house because we love it and it obviously reduces the risks of the move slightly - but if it means we will be worse off it seems pointless. On the other hand properties seem to have reached their peek (on their way down slightly here) so it may be worth cashing in on that (although they seem to take forever and a day to sell!).

God its a bloody minefield isn't it. Hopefully when the gang in oz wake up they'll be able to offer some advice.

Cheers

Ty!

cypry

[QUOTE=tygwyn]Hi Guys

Hubby has an interview for RAAF Richmond in the UK in two weeks and we are trying to way up what we would do if he was to be offered a position. We really don't want to lose our UK property and so would love to let it, but we need to know exactly what costs are incurred through doing this - insurance, tax etc? Our mortgage would be slightly less than the rental income (about £40) so it really doesn't leave us a lot for agents fees etc.

If anyone is letting their property and could offer advice I would really appreciate it. I know we are being slightly premature here as he hasn't even been offered a job yet but having all the facts and figures early on will really help if and when he is! (ever the optimist!!).

Cheers


Hi,
We have looked into this in depth. We already own a buy to let in the Uk and still live here. I can tell you that full management from an agent is the way to go if you move abroad and they will charge you around 10% of the rental income. You have to let insurers know that you are renting the property out and your mortgage provider...... ( well thats up to you) If you are an overseas landlord you would need an accountant to do returns even if you are not living here and get a FICO number from the accountant so as the tax man doesn't deduct 23% from the rental income per month just in case he needs a cut (ROBBER) If there is no equity left at the endof the month then you will be fine as you are not making a gain. Rent it unfurnished, just white goods otherwise there are a lot more things that can go wrong.
With regards the otherside (OZ Taxman) He ain't interested unless you buy a house in Oz then you own two houses and one is subject to CGT. So rent in Oz. You got six years after which you are then charged CGT anyway.
Sounds very complicated I agree but you need some good advice from an accountant over here and a recommended letting agent. There are some good threads on this website with regards renting out your property, have a trawl through. We are selling our buy to let and using the cash for the move to Oz. We are then keeping our main residence and renting that out cos you never know you might be glad one day that you didn't sell !
Confused B4?? Well your probably suicidal now
Good luck

Chalkfarm

Hi,we rent our house out and dont worry about the tax side of it, as you just fill in a form and send it of to the tax man and he sorts it out, so you dont have to pay a huge amount of tax.Your agent will explain it all to you and its very easy.As for amounts of money each month depends on what you want from your agent,5% plus vat for basic money collection to 10/12% for full management service.This is collection of rents,checks on house,ect.We have our central heating,electrics and drains covered as you never know what will happen and you dont want a huge bill,!this costs us around £26 per month.You can even take out insurances to cover for tennants that do a bunk!If you need any more info please PM me and I will be glad to help.All the best Claire

Mrs Jackaroo

Cheers for that both! That clears up a lot for me! I was worrying that I would have to lose a percentage to the tax man every month! We were planning on renting in Australia so that works out perfectly. Didn't realise that there were different levels of management either so thats something to look into. A neighbour of ours says that he would be happy to manage it as hes done it before - not too sure what I think about that though - may be more stress than its worth. At least if its with an agent we would relax a bit more.

Grayling

You are liable for Australian Tax on your worldwide income. That includes any rental income from a house in the UK

G

walnut

I am not and expert in these matters but this was my experience:
Lodging the form with FICO means that they will not deduct the tax up front (ie you can do it as part of your tax return). During your first year out of the country you pay tax on UK earnings to the UK tax man and Oz earnings to the Oz tax man (UK and Oz have a tax treaty in place). The problem ocurrs in year 2 when you are no longer deemed resident in the UK for tax purposes and Oz get a bite at your worldwide earnings. There are two issues here 1) If you are offsetting mortgage interest against your rental income (to reduce tax liability) then the Oz government will charge you 10% withholding tax on the interest amount (this relates to the fact that the mortgage is classified as an overseas loan) and 2) your marginal tax rate in Oz could be higher (although from what you it looks like you will have negative profit anyway). One slight benefit is that if the mortgage is in both names then the withholding tax can be split between both parties and if you do not work then no need to pay it. The other thing you can consider is whether you want to actually declare this on your Oz tax return. Other people I knew in this situation, who were using local accountants, did not. Unfortunately I was in the situation where my company paid for Deloitte & Touche to prepare my returns and 1) they have a dedicated international tax department who know all the rules and 2) I told them about my UK property so couldn't subsequently backtrack.

Hope that helps.

rima+kids

dont forget you have to pay the good old council tax as well!!!

Merlot

Don't the tennants pay this when they are in place? Of course, when it is untennanted this is the landlords cost.

M

Secretsquirral

Yep, when we rented out our UK property the council tax was down to the tenants (and in Oz the equivalent is down to the landlords, aparently.)

jskogsta

Why would you get taxed in both countries? That has to be wrong. I am letting my house in Norway out and I have to get the taxation authorities here to accept that I am no longer living in Norway. Thus tax to Australia and not to Norway for all income. That would include cash for the house as well ..

.. how this applies when doing the tax in Australia; have no idea! I guess we have to use a qualified tax agent.

I would assume that UK have a similar agreement with Australia???

/Jørgen

Army Man

Hi,

I am in a similar situation, as I am in the process of transfering to the Australian Army and I am also looking into letting out our UK property. I have done a little research into the issue and have started to get some useful information. The HSBC bank have an international department that offers some useful fact sheets about ex pat banking etc.


http://www.offshore.hsbc.com/public/...n/taxfacts.pdf

This link takes you to booklet that covers a number of money issues including renting out proerty and associated tax issues. I hope this is of some help.

Many thanks to everyone else, as I too now feel a little the wiser.

Cheers

walnut

Correct, the UK and Australia do have an agreement. In year 1 (whilst you would be deemed resident in the UK for tax purposes) all UK earnings are taxed by the UK tax man and all Oz earnings are taxed by the OZ tax man. In year 2 (actually once you have been outside of the UK for 1 full tax year) you are deemed non-resident for tax purposes and there will be no tax to pay in the UK, all the tax is paid to the OZ tax man, under their rules. These rules applied to me whilst on a 457 visa. Not sure if they differ under a PR visa.

moneypenny20

You also have to bear in mind that you might have long periods when the property isn't rented out. You will still have to pay the mortgage whilst paying rent in Aus.

When I looked into it the management cos round here charge the earth to cover this and anything less seemed a waste of time having.

You can't guarantee that the management co will get quotes for works needed. They tend to have a list of businesses they use, regardless of the cost.

What they say they will do and what they actually do, sometimes may be two completely different things.

Good luck.