cormaclynch

Hi Guys,

Been away for months so sorry if this has been asked already.

I have a house in the UK and its losing money. I'm currently living in Australia and have been for the full tax year. With rental income minus mortgage payments and repairs required by the tennant I lost approx 4000 pounds sterling over the year July 2010-2011.


Just wondering if I can claim this back as an investment property thats losing money, i.e negative gearing?

Thanks in advance for any answers.

Alfresco

Yes! You can offset foreign property losses against your personal income in Australia. (unlike in the UK)

http://www.ato.gov.au/

You can phone them or look through the website.

NickyC

Note that you can only claim the interest paid on the mortgage.

So great if you have an interest-only loan - you may be able to deduct the whole 4k UKP. Won't be able to deduct quite so much if some of the loss includes principal payments.

isgraham

Remember to claim maintenance and management fees and if you travel to the UK for an "inspection" to claim a portion of your flight costs and accommodation.

Rambi

Be careful with this one. It's either all or nothing there is no portion. If you have any "me" time on the trip then you can't claim even a portion of the flight as an expense.

isgraham

It depends on your reason for going back who's to say that your main reason wasn't to inspect your property even if you did do other things while there

here are the rules anyway

http://www.ato.gov.au/individuals/co....htm&page=6&H6

babysinead

When you say "claim back" do you get money back or is this offset against your TFN and your pay less tax (like in the UK with a tax coding notice?)

We have a house we are renting, though not losing money yet (might if interest go up though) through an agent who i have to pay £90.00 per month for not doing alot, i registered this with the tax office before we left so we would not have to pay the higher amount of tax, but we still pay 17% vat on the management fees

cormaclynch

Thanks for the replys guys.

Yes im on an interest only loan so should be able to claim the majority of it back.

I'm going back in September Primarily to check on the house etc......and as luck would have it my sister is getting married too, stroke of luck the inspection and wedding coincided...

Rambi

So I was right about the flights then.

sonlymewalter

does this mean a UK mortgage holder who's losing money (negative gearing) can claim against this and pay less Tax in Aus? why would the Aussie Tax system let Aussie Tax payers pay less cos of losing money in the UK

Not having a go at the OP cos he's only taking what's his....just trying to understand why Aus would disadvatage itself

Alfresco

Yes, they only changed the rule a few years ago.

Since you have to declare worldwide income and can be taxed on it Oz (the profit), then it's only fair that you can claim back legit expenses if you don't make a profit against your income.

sonlymewalter

oh wow....so if you make money in UK then you pay Aus Tax on it too. Didn't know that either

more chance of getting Tax relief than paying more tax I would have thought

Alfresco

If you make a profit on your house in the UK, HMRC will grab their bit first and because of the tax agreement with Oz, the tax paid in the UK can be offset against tax paid to the ATO on your tax return.

If a loss on your property is made in the UK, however, then HMRC won't pay you anything back. (You can only offset it to the next financial year). So this loss can be offset on your ATO tax return.

sonlymewalter

what % of people gain profit Vs lose it d'ya reckon?

Alfresco

Probably not many, but I think the OP will be able to claim legit expenses back from the ATO.