Renting out house in UK while living in Canada
Mar 21st 2010, 9:47 am
#1
Just Joined
Thread Starter
Joined: Mar 2010
Location: North West UK but dreaming of Ontario!
Posts: 26
Renting out house in UK while living in Canada
This is a long way off for us but I like to be prepared 
We have just applied for FSW1 and will want to rent out our house in the UK for a year or two while we get settled in Canada. The main reason for this is just in case we get to Canada and realise that it isn't for us (highly unlikely!) or if we have to return to the UK for any reason - again highly unlikely. Has any one else done this? Any problems or issues we should think about? We anticipate being in Canada for a long time but this is a 'just in case' scenario. Also, has anyone sold a house in the UK whilst living in Canada - again any advice would be much appreciated
As I say we have about 4 years before we will need to do this but I do liked to be prepared!
We have just applied for FSW1 and will want to rent out our house in the UK for a year or two while we get settled in Canada. The main reason for this is just in case we get to Canada and realise that it isn't for us (highly unlikely!) or if we have to return to the UK for any reason - again highly unlikely. Has any one else done this? Any problems or issues we should think about? We anticipate being in Canada for a long time but this is a 'just in case' scenario. Also, has anyone sold a house in the UK whilst living in Canada - again any advice would be much appreciated
As I say we have about 4 years before we will need to do this but I do liked to be prepared!
Mar 21st 2010, 4:38 pm
#2
BE Enthusiast
Joined: Oct 2009
Location: Vancouver
Posts: 424
Re: Renting out house in UK while living in Canada
This is a long way off for us but I like to be prepared
We have just applied for FSW1 and will want to rent out our house in the UK for a year or two while we get settled in Canada. The main reason for this is just in case we get to Canada and realise that it isn't for us (highly unlikely!) or if we have to return to the UK for any reason - again highly unlikely. Has any one else done this? Any problems or issues we should think about? We anticipate being in Canada for a long time but this is a 'just in case' scenario. Also, has anyone sold a house in the UK whilst living in Canada - again any advice would be much appreciated
As I say we have about 4 years before we will need to do this but I do liked to be prepared!
We have just applied for FSW1 and will want to rent out our house in the UK for a year or two while we get settled in Canada. The main reason for this is just in case we get to Canada and realise that it isn't for us (highly unlikely!) or if we have to return to the UK for any reason - again highly unlikely. Has any one else done this? Any problems or issues we should think about? We anticipate being in Canada for a long time but this is a 'just in case' scenario. Also, has anyone sold a house in the UK whilst living in Canada - again any advice would be much appreciated
As I say we have about 4 years before we will need to do this but I do liked to be prepared!
We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).
The things that I think you need to consider are:
1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.
2. Lender - you need to get their permission to rent out the property.
3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.
4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.
5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.
If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now! 6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.
7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.
8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.
9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.
10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.
11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.
12. Keep at least one UK bank account open to deal with income and expenditure.
13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.
This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will
Yelkcub
Mar 21st 2010, 4:52 pm
#3
Joined: Sep 2008
Posts: 12,830
Re: Renting out house in UK while living in Canada
Don't forget the tax implications - If there is a gain from when you become a resident of Canada to when you sell, there could well be a capital gain. The valuation is in CDN $ on the day of arrival (best to use the Bank of Canada rate as that is what CRA use). As the GBP is at an all time low on the CDN$ the gain could be quite large if property goes up and the pound strengthens at the same time.
Worldwide income has to be reported on your CDN tax return each year (or losses), any foreign assets valued at over $100,000 also have to be reported each year (hefty fine if you don't and CRA find out). Any gain (or loss) you make in currency transactions, converting GBP to CDN is also reportable and taxable.
Worldwide income has to be reported on your CDN tax return each year (or losses), any foreign assets valued at over $100,000 also have to be reported each year (hefty fine if you don't and CRA find out). Any gain (or loss) you make in currency transactions, converting GBP to CDN is also reportable and taxable.
Last edited by Aviator; Mar 21st 2010 at 4:54 pm.
Mar 21st 2010, 5:31 pm
#6
Joined: Sep 2008
Posts: 12,830
Re: Renting out house in UK while living in Canada
Too right. I can never understand people who get all excited about getting a tax refund each year, all they did was give the government an interest free loan. Better to pay taxes at the end and use the money yourself. Just have to be sure there is some left to pay the taxperson their (attempt at being PC) bit.
Mar 21st 2010, 9:34 pm
#7
Democracy advocate
Joined: Mar 2006
Posts: 12,460
Re: Renting out house in UK while living in Canada
Hi
We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).
The things that I think you need to consider are:
1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.
2. Lender - you need to get their permission to rent out the property.
3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.
4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.
5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.
If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now!
6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.
7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.
8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.
9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.
10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.
11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.
12. Keep at least one UK bank account open to deal with income and expenditure.
13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.
This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will
Yelkcub
We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).
The things that I think you need to consider are:
1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.
2. Lender - you need to get their permission to rent out the property.
3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.
4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.
5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.
If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now! 6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.
7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.
8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.
9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.
10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.
11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.
12. Keep at least one UK bank account open to deal with income and expenditure.
13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.
This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will
Yelkcub
(13). - this is an NRL1
also
(a). Consider lettings insurance - can help pay legal fees for evictions etc and can get emergency repair cover for when the boiler or elec fails on a sunday night.
(b). Need an energy effy cert
(c). if your profit (rent income minus mort interest, agents costs, wear & tear etc) is less than the UK tax free amount (circa GBP7k) then no UK tax to pay, but you will have to add the profit number to your Canadian income and pay income tax at your marginal rate. If you do end up paying some UK income tax, it can be deducted from your Canadian tax return.
(d). At some point (after 3 years letting) you may be exposed to a UK CGT claim if you sell.
(e) any furniture you leave must meet fire regs
Mar 22nd 2010, 7:25 am
#8
Just Joined
Thread Starter
Joined: Mar 2010
Location: North West UK but dreaming of Ontario!
Posts: 26
Re: Renting out house in UK while living in Canada
Thank you so much! So much information there but as I say we have a while to get organised! Just got to slowly start decorating some of the rooms and get rid of a bit of damp - happy days!
Just got to slowly start decorating some of the rooms and get rid of a bit of damp - happy days!
Mar 27th 2010, 5:27 pm
#9
Forum Regular
Joined: Apr 2006
Posts: 50
Re: Renting out house in UK while living in Canada
I have a property in the UK. My understanding of the tax laws is that the UK and Canada have a reciprocal tax agreement. After five years of being a non resident in the UK you do not have to pay capital gains tax on property. As per the reciprocal agreement, you should therefore not have to pay any tax on the gain when you bring the money into Canada. It would be a good idea to get some professional advice on this - CRA and Inland revenue also have good info on their website. Good luck
Mar 27th 2010, 8:20 pm
#10
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Renting out house in UK while living in Canada
I have a property in the UK. My understanding of the tax laws is that the UK and Canada have a reciprocal tax agreement. After five years of being a non resident in the UK you do not have to pay capital gains tax on property. As per the reciprocal agreement, you should therefore not have to pay any tax on the gain when you bring the money into Canada. It would be a good idea to get some professional advice on this - CRA and Inland revenue also have good info on their website. Good luck
Mar 27th 2010, 9:21 pm
#11
Forum Regular
Joined: Apr 2006
Posts: 50
Re: Renting out house in UK while living in Canada
Hi again,
I checked on the Inland Revenue website and it seems clear to me that if you have been a non resident for at least five years, you are not liable to pay Capital Gains Tax. However, I am not an expert and it is always good to get specialist advice.
I checked on the Inland Revenue website and it seems clear to me that if you have been a non resident for at least five years, you are not liable to pay Capital Gains Tax. However, I am not an expert and it is always good to get specialist advice.
Mar 27th 2010, 9:32 pm
#12
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Renting out house in UK while living in Canada
The Inland Revenue website can't tell you anything about your tax liability in Canada.
Mar 27th 2010, 9:35 pm
#13
Forum Regular
Joined: Apr 2006
Posts: 50
Re: Renting out house in UK while living in Canada
of course, you are correct! I think the best thing is to get professional advice. Thanks for pointing that out.
Apr 6th 2010, 7:30 pm
#14
Just Joined
Joined: Mar 2010
Posts: 3
Re: Renting out house in UK while living in Canada
Hi
We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).
The things that I think you need to consider are:
1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.
2. Lender - you need to get their permission to rent out the property.
3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.
4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.
5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.
If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now!
6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.
7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.
8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.
9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.
10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.
11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.
12. Keep at least one UK bank account open to deal with income and expenditure.
13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.
This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will
Yelkcub
We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).
The things that I think you need to consider are:
1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.
2. Lender - you need to get their permission to rent out the property.
3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.
4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.
5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.
If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now! 6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.
7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.
8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.
9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.
10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.
11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.
12. Keep at least one UK bank account open to deal with income and expenditure.
13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.
This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will
Yelkcub
could you send me your 'file template' sounds a brilliant idea
Thanks
Aug 9th 2010, 11:33 am
#15
Forum Regular
Joined: Oct 2007
Posts: 31
Re: Renting out house in UK while living in Canada
Looking for some info about letting a home in the UK. Our home is fully paid off and we are considering an option of releasing equity and letting it out.
Have contacted a few banks so far but most stating that they don't do this any more because too risky (HSBC withdrew their releasing equity option for letting because "renting is too risky").
Has anyone recently come across banks or building societies that would still consider releasing the equity for this purpose?
Alternatively, perhaps we should keep the property and rent out without releasing any equity. However, not sure what would be tax efficent if we sold in a few years time (i.e. capital gains). Any thoughts on this?
Thanks
Have contacted a few banks so far but most stating that they don't do this any more because too risky (HSBC withdrew their releasing equity option for letting because "renting is too risky").
Has anyone recently come across banks or building societies that would still consider releasing the equity for this purpose?
Alternatively, perhaps we should keep the property and rent out without releasing any equity. However, not sure what would be tax efficent if we sold in a few years time (i.e. capital gains). Any thoughts on this?
Thanks