Renting House in UK..... Taxman's cut?????

[Guest fatman]

Hello everyone!!

We haven't managed to sell our house in over a year, so thinking about Renting it out.... can anyone give us an answer to how the Tax is deducted as our Agent doesn't seem to know!!??

As a rough guide : Say our Rental was £1,300

Agent app 180

Gardener 100

Landlord Ins 48

Mortgage 500 (NB. Mortgage "Interest only Mortgage")

We are told there is no Tax to pay on an "Interest only Mortgage"...... But what Tax would we pay each Month on the above???

We keep getting all different answers!?

[noworriesmate]

Hello everyone!!

We haven't managed to sell our house in over a year, so thinking about Renting it out.... can anyone give us an answer to how the Tax is deducted as our Agent doesn't seem to know!!??

As a rough guide : Say our Rental was £1,300

Agent app 180

Gardener 100

Landlord Ins 48

Mortgage 500 (NB. Mortgage "Interest only Mortgage")

We are told there is no Tax to pay on an "Interest only Mortgage"...... But what Tax would we pay each Month on the above???

We keep getting all different answers!?

 

Hi Fatman,

 

Firstly, if you fill out form NRL1 you won't have any tax deducted from you at source - If you don't then your agent is obliged to deduct 25% of the rent from and give it to the taxman. You will however need to fill out a UK tax return each year but based on the figures you have provided it is unlikely you will have to pay any tax in the UK. Presuming you are resident in Australia for tax purposes, you will however need to also declare the income in your Australian tax return but you will only pay tax on the profit you make on the rent after the expense you have listed (based on your figures around $6000 p.a.) This will be taxed at your Aus income tax rate.

 

You should also consider that you may be liable to tax on the profit you make on the sale of the property when you eventually sell it - capital gains tax is not nice in Aus and you might want to take advice from a tax expert just to make sure this doesn't come back to bite you in the future. I use Go Matilda for my tax returns as they are able to complete both tax returns for me and the proprietor (Alan Collett) is a registered accountant in both the UK and Aus.

 

Hope that helps

 

NWM

[Guest fatman]

Cheers for you advice NWM

[Andrew from Vista Financial]

Hi fatman

 

NWM has pretty much covered it off for you, just one point, the income will only have to be declared here in Australia if you are a permanent resident not a temporary resident.

 

It can get a bit confusing but a resident for tax purposes is different to a resident for visa purposes therefore someone can be a resident for tax purposes but not a resident for visa purposes thus only having to declare Australian source income.

 

 

 

Regards

 

 

Andy

 

 

 

p.s If you will be a permanent resident then exactly as NWM states!

[Guest fatman]

thanks for your help

[Guest K.gordon]

Hi there, all I know as I asked the same question - if you earn money from renting your property -i.e. getting more rent than your mortgage, then you pay tax on that part only - we've rented our house through an agent and paying the full 10% management fees on top so we're on a shortfall of £28pm for our mortgage so this doesn't apply to us. I think you only pay this tax when you sell your house though (forgive me if I'm wrong on that bit but that's my understanding).

Hope this helps a bit

Kate

 

forgot this bit, our letting agent takes tax payment from us, hence the £28 shortfall per month

[TheHarrisonFamily]

We rent out our UK house. Our tax agent told us last year that we have to pay tax on the whole amount of the income, as it is paying off the capital. So although we make very little money ( most is paid out on the mortgage), he said this year we will have a HUGE tax bill as the total amount recieved from the rent is consisdered income and taxable. Hence we aint put our tax claim in yet, cos were worried to death

Edited October 14, 2012 by TheHarrisonFamily
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