Archived Discussion Topic

To Rent or Sell in the UK       started by debs1966 on 17 May 2010   (22820)
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From debs1966

17 May 2010 7:31 AM
Hi Guys I am in two minds as to what to do with my rental property when I move to Australia. We have just sold our house and my partner said it would be a good idea to also sell the rental. My thoughts are that we should keep it and the money we get back from the rent will help us out in Oz does anyone have a rental still in the UK and are there taxes to pay to Oz or the UK. Also, its not a good time to exchange money at the moment. Any advise on the matter would be greatly appreciated. Many thanks Debbie
From leigh_and_ross

To debs1966

17 May 2010 12:19 PM
I'd sell it. Heres why... Of course the income will be taxed, its foreign income, and the tax rate that will apply will be at your marginal rate. (The highest tier that you pay - for a lot of people here - thats around 40%). In Australia, losses for an Australian investment property can be claimed against Aussie tax paid. This does not apply to an overseas investment property. Of course if you sell it once you have moved here, the profit you have made will be subject to Aussie tax (taking into account any UK tax you will have to pay). With the UK in such terrible financial shape and talk of second homes flooding the market due to the CGT possibly rising in the emergency budget (from 18% to 40%), this could have a knock on effect on house values - and soon, depending on what happens. Managing property and dealing with issues is v. hard from over here, you are so far away and therefore any required maintenance could cost you a lot more than if you were there to sort it. Coming here with the best possible sum of money that you can scrape together will ensure your best possible chance of making things work here - if you intend in moving for good, and like property as an investment, buy here and get the generous tax deductions for owning an investment property, or buy shares in property trusts! Just my thoughts... sure lots of others will offer valid points too. Lots to consider - good luck. Leigh
From zenshin

To leigh_and_ross

17 May 2010 11:38 PM
Think you might be best to clarify things with an accountant who has knowledge of the australian and uk tax system. You are actually able to negatively gear property owned in the Uk against your Australian income. I do. I have my property managed by an agent and the tenant's rent covers the mortgage on what used to be my residential property. Other properties I have are not as fortunate in that the rental does not cover the mortgage. It all depends on your financial position and whether you could honestly afford to keep up the repayments should there be voids (and there will be). There are other rules regarding capital gains that your accountant can provide you with more details. I have been told that as I am renting in Australia I can keep my residential address in the UK for up to 6 years without capital gains. All depends on your long term plans.