Renting

Old Jan 23rd 2011, 11:16 am
  #1  
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Default Renting

I winder if anyone can give me some information on renting out a UK property while living in NZ. We are trying to sell our house but it's proving problematic at present so wanted to investigate renting it out instead.

We don't know anything about it to be honest but I did wonder what happened about tax payable on rental if we are not resident in the UK.

If anyone can give me any pointers (what to avoid, good agents etc) I would be very grateful.
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Old Jan 24th 2011, 2:58 am
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Default Re: Renting

Hi Reylan. We rented our UK property out via our local estate agent who also managed properties. It was pretty simple - we used a UK internet banking account to manage the financial side of things, and email to communicate. Apart from our kitchen ceiling falling in (?!) it all ran pretty smoothly, and it was sold after about 6 months or so.

Regarding the tax situation - if you are planning to move that income to NZ, then it will be taxable here, even though it was earnt in the UK. We just left all of ours there in the UK and spent it on our last trip over.

It also depends on how <ahem> 'honest' you want to be. If this is going to be a long term thing then I would set it all up with the IRD this end so you don't get any nasty tax-related surprises in the future. In the short term, just rent it till you sell it, and keep it to yourself.

I think the absolute key is to be comfortable with your agent. Ask them for evidence of long-distance property management before yours. Give them scenarios (tenants bail out on you/ damage the kitchen/ burn down the shed) and what their responses would be. Ask for references of people who's property they currently manage, and if you can contact them. One big thing for us was that as standard, they would call out a tradesman for anything - even if non urgent. This included basic stuff like fixing a fence panel etc. They'd then charge for the benefit. We quickly put the kybosh on this and they would contact us first regaridng any maintenance issues. So, if you have family/ friends still in the UK and close to the rental, ask the agent to put all non-urgent stuff to you first so your contacts may be able to help you out at a fraction of the cost.

Hope this helps, and good luck with it.
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Old Jan 24th 2011, 3:29 am
  #3  
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Default Re: Renting

I'm renting my house out whilst I'm here in NZ. Mine has been done through my local estate agent, although they will obviously take a percentage of the income - 10% with mine. You could also rent it out privately but my agents were very thorough in doing checks on potential tennants.
With regards to the tax I've left my UK account open to receive the payments. I don't pay any tax on the amount i receive as its less than £7000 per year. Prior to leaving the UK I completed a form to apply for this.

My agents had found someone to rent my place within about 24 hours & it was a very simple process. Prior to them taking the house the agent went round it taking photos of everything so that they would know if any damage occurred in due course.
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Old Jan 25th 2011, 12:34 am
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Default Re: Renting

Hi, we rent our flat in the UK.
We were told by HMRC that you will only pay tax on income you receive after costs. If the rent covers the interest of your mortgage and nothing else then you won't pay tax. You can also allow for reasonable expenses such as repairs to keep the house in a rentable state.

If however you are receiving rent that goes towards capital on your mortgage you will be eligible for tax on that as it is classed as profit!
Take a look at the HMRC website as that has more details. There is also a form to fill in telling HMRC that you are leaving the country but will still be receiving an income.

I would also look into some sort of landlord insurance as we had a real problem tenant at first who refused to pay rent and we then had to evict. Unfortunately the law is on the tenants side and as such we lost around 3,000GBP in rent and legal costs!
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Old Jan 26th 2011, 7:07 pm
  #5  
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Default Re: Renting

If you are non resident in the UK, then you are not liable for tax there. You need to make sure that all your bank accounts give you gross interest.

In NZ you are allowed 4 years as an emmigrant, tax free on all overseas income. You need to delcare it but will pay no tax.
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