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Renting UK house, is it useful for university local fee qualification?

Renting UK house, is it useful for university local fee qualification?

Old Jan 17th 2024, 12:59 pm
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Default Renting UK house, is it useful for university local fee qualification?

Hi all,

I have just accepted a company transfer to Houston, and will be moving with family pending visa in around 3 months.

Have done a fair bit of reading to familiarize myself with the changes to taxes and what I will have to deal with, but a decision I'm not clear on is best course of action with our UK house. I am also unsure if keeping a house in UK would potentially help when my kids, after reaching school age in a few years, wanting to go to university in the UK and being eligible for local fees (significant difference vs overseas fees). My company would switch me to a permanent contract out there if I elected to apply for a green card, that is a choice point.

Our house, if rented out, would certainly make a loss, considering the agent fees + overseas tax to HMRC (1.8k mortgage, 2k rent, 10% agent, 20% tax by my calculations). I then may be liable for further taxation on the rental income in the US, as they calculate the gains differently? Taking this into account, if I never planned to live in the house again (which I don't), I am struggling to think of positives of keeping it beyond maybe helping the situation if my kids want to go uni in the UK - lots of its!

Anyone else have a similar situation? Thanks in advance!
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Old Jan 17th 2024, 1:10 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

The house won't have any impact on paying UK fees. You need to have lived in the UK for 3 years before Uni.

To be eligible to pay fees at the UK rate, you must normally be a British citizen (or in specified cases the family member of a UK national or a person who is settled in the UK), be ordinarily resident in the UK on the first day of the first academic year of your programme and have been ordinarily resident within the UK, the Republic of Ireland (in some cases), the specified British overseas territories or the Channel Islands/Isle of Man (the “Islands”) for the three year period before the first day of the first academic year of your programme.
The full rules are on the UKCISA website. There are a lot of exceptions but mostly for pretty niche situations.
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Old Jan 17th 2024, 1:39 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Hi, and welcome to BE. Nope, it'll make no difference just owning a house. We also rent out our family home, and our daughter is starting uni in the UK this year, our ownership of a property hasn't been a factor at all. But will you be on an open ended/permanent contract or a fixed term assignment? If the latter, you may find you can pay local rates - obviously a green card could scupper that though.

As for rental income, will you have other income from the UK, and is the property owned jointly by both you and your spouse? If that is your only income and you own it jointly you'll both be earning under the taxable limit so no UK tax to pay. But do check your mortgage payments won't go up (some companies add 1% if you're renting it, or even make you switch to a BTL mortgage - again a temp assignment v green card may be a factor here). I'd also check the rental amount, as rents are crazy right now and you may find you get well over the valuation for it. And don't forget everything you can claim as expenses, not just the management company fees. Things that you do to prepare the house for rental i.e. electrical certs, redecoration, shampooing carpets, even things like getting new keys cut, will all add up. We spent £16k getting our house ready for rental but then of course that comes off our income for the first year to reduce our taxable profit.

Do also look in to Capital Gains Tax on both sides of the Atlantic, if you never plan to live in the property again, that'll be a big factor as well.

Good luck.
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Old Jan 17th 2024, 3:26 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Thanks for those replies,

Yes, initially I will be on a fixed assignment of 4 years, and can usually extend up to the max length of the visa with my company. If that could be a determining factor would certainly be useful to know if we go for a green card or not and impact to our kid's uni fees. Transferring back to the UK after I take this role is no certainty for me, hence even the green card consideration, as there would be a more permanent job for me in the US - it would be nice not to have to move so frequently, only be back in the UK for 3 years.

Only income from the UK will be the rental, and it is a jointly owned house. I plan on asking the mortgage company for an exemption - not done yet. Useful info relating to the expenses around getting the house ready, for certain there will be some, I'll need to keep track. Relating to the CGT, will there be US equivalent gains to pay after I stop living in the US, say in 5 years, once back in the UK and I decide to sell. I know that once you've been a US resident you can still have tax obligations, just never thought of this scenario.
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Old Jan 17th 2024, 4:10 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

If your kids are not even in school yet, UK University fees really aren't something you should worry about now. By the time they are ready for higher education, either you'll have been back living in the UK for years, or they will be fully integrated into the US education system and they will want to go to university (college) in the US.
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Old Jan 17th 2024, 4:38 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Originally Posted by yazooo
Yes, initially I will be on a fixed assignment of 4 years, and can usually extend up to the max length of the visa with my company. If that could be a determining factor would certainly be useful to know if we go for a green card or not and impact to our kid's uni fees. Transferring back to the UK after I take this role is no certainty for me, hence even the green card consideration, as there would be a more permanent job for me in the US - it would be nice not to have to move so frequently, only be back in the UK for 3 years.
That will depend on the university, each will have their own criteria. About half the ones we contacted said we could have local rates (we're on an expat assignment), the other half said tough luck, we'd still have to pay international fees. I missed how young your kids are though, I agree you're worrying about this far too early if they're not even school age yet! Who knows what the rules will be by the time they end school, and your temp assignment is very unlikely to be temporary still in 15+ years time. And frankly if they have spent their whole lives in the US, they could be unlikely to want to go to the UK for uni anyway, it will be a foreign country to them - that's if they even want to go to uni at all!

Originally Posted by yazooo
Only income from the UK will be the rental, and it is a jointly owned house. I plan on asking the mortgage company for an exemption - not done yet. Useful info relating to the expenses around getting the house ready, for certain there will be some, I'll need to keep track. Relating to the CGT, will there be US equivalent gains to pay after I stop living in the US, say in 5 years, once back in the UK and I decide to sell. I know that once you've been a US resident you can still have tax obligations, just never thought of this scenario.
Do keep track of everything, a good spreadsheet will be invaluable. You can't add anything that adds value (i.e. if you decided to build an extension or put in a new kitchen, you couldn't claim that), but you can claim anything that is repairing/preparing or an expense directly related to renting.

US taxes will depend on your status I think - if you are a green card holder, you'll still be liable for US taxes and have to submit US tax returns but I don't believe that applies if you're just on a temporary visa. Your company should give you tax advice (including your tax returns done on both side of the pond) as part of your relocation package, so take advantage of that and make sure you get it all in writing too.

Good luck.

Last edited by christmasoompa; Jan 17th 2024 at 4:41 pm.
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Old Jan 17th 2024, 6:31 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Originally Posted by Owen778
If your kids are not even in school yet, UK University fees really aren't something you should worry about now. By the time they are ready for higher education, either you'll have been back living in the UK for years, or they will be fully integrated into the US education system and they will want to go to university (college) in the US.
​​​​​​Sorry if I wasn't clear but one kid already in senior school, so it's within my timeline. Definitely a tricky decision to make a couple years of which uni system they'd prefer etc.
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Old Jan 17th 2024, 6:33 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Thanks for the additional info on taxes, and yes, I believe at least for the first year I get support with tax filing.

Yep, really looking forward to it!
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Old Jan 17th 2024, 8:22 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Originally Posted by yazooo
​​​​​​Sorry if I wasn't clear but one kid already in senior school, so it's within my timeline. Definitely a tricky decision to make a couple years of which uni system they'd prefer etc.
Ah, ok. The 'after reaching school age in a few years' threw us I think! That makes more sense now.

It is tricky as the systems are so different. And I think it will depend on your child. My eldest is going back to the UK as I said above, and that's because she knows exactly she wants to do, always has done, so she wants to start studying her subject of choice from day 1. Whereas my son (who'll be applying for uni's later this year/early next) doesn't know what he wants to do yet, so he's considering a US uni so that he can have a more general education to start with. But there are tons of other factors to look at as well, and your children will need to weigh them all up - a big thing for my daughter was not being able to drink as a student legally here! 😂

Good luck with the move.
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Old Jan 24th 2024, 3:45 pm
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Default Re: Renting UK house, is it useful for university local fee qualification?

Isn't there a case of which visa you are on? If it is considered a temporary visa, which it sounds like, there is an argument that the USA is not considered the child's primary location. I don't know but I am sure I saw something like that on the returning home forum when university fees were discussed. Might be worth posting on that forum for answers. How old are your children?
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Old Feb 20th 2024, 8:42 am
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Default Re: Renting UK house, is it useful for university local fee qualification?

Thanks. As an update, booked my interview for the visa, and with my understanding get up to 7 years on the temporary visa which will work fine for the role and get the kids to uni - of course no idea where they'll want to go! Having found a colleague of mine in a similar situation and staying on the temporary visa and not opting for a green card was key for them to be treated as local when their children went to uni in the UK. It also makes quite a difference to the company pension. So the simple plan at the moment: 'see how it goes', no immediate rush for a green card, make sure we like it out there first and in the meantime I'll rent out my UK house.
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