mudblood21

Hi

I have been renting out my UK property since I left in April 2010. I have my friends' children in the house who are fabulous tenants. The rent is lower but the peace of mind is phenomenal.

In April 2014 I will be start being taxed in NZ for that income.

The NZ tax office gives a pretty clear list = but does this apply to NZ properties only, or the overseas ones as well?


thanks

MrsFychan

my understanding, and someone will come along and correct/agree is that any profit you make will taxed. So if you are still mortgaged you take what you earn from the property minus the mortgage payments and the rest is taxed. There may be other loop holes but you would need to speak to accountant/solicitor to find them out

janiejones

We're doing this, but we haven't hit the four year mark yet, we're hoping to sell before then. We do self assessment with HMRC, so the income from the rent is taxable, but you can deduct the interest element of the mortgage payments (not the capital repayment bit), insurance, boiler cover, charges for remortgage, any non capital improvements (decorating etc.). What's left over is taxable, but we then split the "profit" between us, and plug that into our self assessment. We can't do the usual SA forms, so have to pay for a spreadsheet that does it for us, but it's pretty straightforward.

My understanding is that if you have income in the UK, you have to pay tax on it here, but you get a credit for the tax that you've already paid in the UK. It'd be good to hear from someone else who's experienced this step.

mudblood21

Thanks so much for your help !

I don't pay any tax at all in the UK. I just filled in a form when I left and since that date I am no longer a UK taxpayer.

I won't be liable for the house for another 16 months, which is when I would have been here for four years.

At the moment there is no mortgage, but I was thinking of taking a landlord's mortgage against it, so that I could use the money as a deposit for a house here. Selling the house in the UK is also an option, but the market is such a mess at the moment, and my tenants are amazing so I don't mind keeping hold of it if I have to wait until the market is stronger to sell it.

I will have to find a tax guru to see if they worry about when the mortgage was taken out. I don't want to remortgage and then find out later that i can't get tax relief on it...

luvwelly

My understanding is that you should be completing a self-assessment non-resident tax return in the UK showing your UK sources of income(rental property).
If the amount of profit after allowable expenses, from your UK rented house is within your generous UK tax allowance then no UK tax will be payable but if it is over the allowance then it will.
NZ are only interested in your worldwide (e.g. UK income) after the 4 years is up. I am at that stage and assume NZ will clobber me for the whole amount as non of it is taxed in UK as my rental income is so low it is under my UK tax allowance.

mudblood21

When I left the UK, it was the case that if you were going to certain countries (NZ included at that time) then you could opt to get everything taxed in the one country rather than a bit in each. Because NZ don't want anything for four years, I chose that way.

I don't pay tax in the UK at all. I can't remember the form number, but you just fill it in, and you are no longer a UK resident for Tax . I had to do a self assessment for the first year because I left the UK on the 8th April and so I was liable for tax for three days (5th-8th April!). Then the second year they sent me another self assessment. I rang them up and asked why, they asked me a bunch of questions and then agreed that I am not a UK taxpayer so I don't have to fill them in any more.

LIke you say, I wouldn't have to pay any tax anyhow as the rental is way under the tax threshold, so the only advantage is that you don't have to fill those long boring forms in.

jmh

Not heard that one before - I might have to get in touch with them because I've been doing a self assessment as luvwelly says.