Advice about renting out UK properties

[Guest K&M]

Hi there am wondering if anyone can advise me or direct me to a decent accountant with experience & knowledge of the UK property & tax laws?

 

Me & hubs have a house each back in the UK (our former homes, never purchased with investment in mind), both are rented out with rent paying the mortgage and not really any tangible profit at this stage.

ATO has taxed us on the "rental income" and it's a massive bill.

 

Feel like I'm really being screwed over here, and considering selling my little UK place even though it really doesn't have any equity in it, hubs in a similar position with his old house, but just wondered if anyone else has been in this position or knows of someone who might be able to find a way of keeping our houses without having this hideous tax bill every year?

 

Many thanks, Kat

[Guest Guest75]

Have you put in all of your costings such as mortgage /agent/repairs??

If not the income from the houses will look like pure profit.

[TheHarrisonFamily]

Hiya

We have rented out our UK house. Have had tax bill here every year, as you say it is considered as income. You cannot offset it against your motgage payments, only the interest.

Hence we are currently selling ours now we are more settled here. However thats never an easy task! Had it up for sale since Feb 14. Sold the same weekend it went on the matket. Sale fell through the same day as our tenents moved out. Resold again and just waiting to complete....takes forever.

[NicF]

I can't recommend an accountant but you should be able to claim the interest on the mortgage as a cost, any agent fees, repairs, other expenditure and depreciation on fixtures and fittings (not sure about the property itself, but an accountant would know). The other stuff you can work out yourself but you will need an accountant to work out a depreciation schedule for you. If you have paid any tax on the income in the Uk then this is also declared on the tax return and you get a credit for the amount paid.

[Smithers]

So if most of rental income covers mortgage payments etc on property do you just pay tax on profit that is sent out to Australia?

[noworriesmate]

So if most of rental income covers mortgage payments etc on property do you just pay tax on profit that is sent out to Australia?

 

It's the interest on the mortgage payments - not the capital, but yes in principal it's just 'the profit' you pay tax on, irrespective of whether you actually send it to Australia and presuming you are resident in Australia for tax purposes.

NWM

[Guest K&M]

Thanks for the advice guys. Maybe there's just no way round it.

 

Apparently I can offset interest on the mortgage and any agent fees and repairs, but the fact is that doesn't add up to a great deal and almost the entirety of the rent goes straight into the mortgage, and no money from that set-up ever makes it to Australia (or even is available as disposable income). It's like a little closed system.

 

Smithers - I would have thought what your saying makes sense but apparently the ATO disagrees! The Harrison Family - sorry for your difficulties with selling your place. Ugh the thought of selling 2 houses from overseas!

[Rammygirl]

You can't claim back your capital mortgage payments in the UK either, it would be like the tax payer buying your house for you.

 

if you can convert to an interest only mortgage as most buy to lets have, you will be better of now, but you will not be paying off the mortgage. It really depends if you are keeping the house as an investment or because you want to return to in in the future.

[kevinr]

Hi

aent you a pm with a good accountant that I use along with some other poms who have property