Tax on UK rental income and sale of UK property

[TylesG]

Tax on UK Property
One big thing to remember, once you are a tax resident in Australia (i.e. from the day you land) you will be taxed in Australia on your worldwide assets. This may include the sale of your UK home.

Tax on moving our money
Also, another tax pitfall is the ForEx Rule which will get you taxed on the "profit" you make if you leave money in the UK after you land waiting for a good exchange rate! Makes a case for moving as much of your cash over as you can ''before'' you make your ''final''entry (i.e. the day we become an Australian Tax Resident). Again, "consult a registered Tax Consultant" who really knows their stuff. On saying that, the exchange rate at the moment is pants, so keep an eye on that.

Do you know where I could find out more about these two issues?
It doesn't seem right to me that you would get taxed on the money you bring with you to Australia? There must be a time levy rule? We are considering renting our home in the UK, as we have just lost our buyers. Do you know how you would get taxed on your UK rental income and in which country?
What happens when you sell your UK property a couple of years later?
All in all it looks like a bad idea to keep property in the UK?! Hope to hear from people who are in a similar situation!

[kaz101]

Hi TylesG,

I moved this topic to a separate post since I think this issue may get a few questions

Have you checked out the Australian tax office website? There is a link in the "Please read...." post towards the top of the forum.

If you have anyone moving your pensions across then they will know the answers to your questions.

We were told that money that we bring with us when we emigrate is not taxable. Since we haven't filled in a tax return in Oz yet I can't confirm that.
I know that any money that is transferred into a pension in Australia has to be done within 6 months otherwise the Australian government will tax it.

When you leave the UK for good you fill in forms for the tax office saying that you are leaving, and also other forms to say that you want to paid gross on your bank accounts (if you are leaving any behind) and also gross on your rental income (if you have any). If you don't fill in the form for the rental income then your letting agent has to with hold 22% tax.

My understanding is that because you are earning money in the UK (with the rental income) then you have to do a UK tax return, however you shouldn't have to pay any tax. The income that you earn in the UK is declared in your Australian tax return and you pay tax on it here.

As I say we haven't had to fill in tax returns since moving to Australia in July 2007, so until we do I won't have any of the above confirmed.

Regards,
Karen

[Dolly]

Originally Posted by TylesG

Tax on UK Property
One big thing to remember, once you are a tax resident in Australia (i.e. from the day you land) you will be taxed in Australia on your worldwide assets. This may include the sale of your UK home.

Tax on moving our money
Also, another tax pitfall is the ForEx Rule which will get you taxed on the "profit" you make if you leave money in the UK after you land waiting for a good exchange rate! Makes a case for moving as much of your cash over as you can ''before'' you make your ''final''entry (i.e. the day we become an Australian Tax Resident). Again, "consult a registered Tax Consultant" who really knows their stuff. On saying that, the exchange rate at the moment is pants, so keep an eye on that.

Do you know where I could find out more about these two issues?
It doesn't seem right to me that you would get taxed on the money you bring with you to Australia? There must be a time levy rule? We are considering renting our home in the UK, as we have just lost our buyers. Do you know how you would get taxed on your UK rental income and in which country?
What happens when you sell your UK property a couple of years later?
All in all it looks like a bad idea to keep property in the UK?! Hope to hear from people who are in a similar situation!

Hi,

I'm trawling thorough the Australia Tax Office website at the moment to see if I can get some clarification but it's going to take some time!! If I find anything I'll let you know.

I strongly suggest, as I said in the sticky at the top of the forum page, to seek professional advice. I have taken out that part of the thread until it's been clarified in more detail.

Dolly

[TylesG]

Thanks for your efforts so far, I am also making enquiries at this end.
It would be useful to know how much tax you pay in Australia on UK rental income... to make the calculations.

[kaz101]

Originally Posted by TylesG

It would be useful to know how much tax you pay in Australia on UK rental income... to make the calculations.

I think that may depend on your income bracket when you are here. There is a tax calculator in the "Please read..." post too.

Regards,
Karen

[Dolly]

Hi TylesG

This is all I've come up with all day...but it's rules for companies so probably not much use. Can't find anything on the 'personal' side.

Foreign source income - other than employment, pensions and annuities

I have to admit, the ATO website is more useless than the Inland Revenue site!!

Also found this: Offshore voluntary disclosure

Will keep chipping away in the hopes of finding an answer.

Dolly

[Elphaba]

Just a couple of things

The form you complete on leaving the UK to become resident elsewhere for tax purposes is a P85 . The one to complete to request payment of gross interest is R85. Links below:

http://www.hmrc.gov.uk/cnr/p85.pdf

http://www.hmrc.gov.uk/forms/r85.pdf


There is a dual taxation agreement between the UK and Australia so you will only be taxed once on any earnings.