Expat buying property in UK
Discussion
My son and his (soon to be) wife have both lived in Sydney for 7+ years.
They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
It looks like they will be deemed to be Non-Resident Landlords & the letting agent will withold 20% of the rental income until they register with HMRC. They get the standard £12,750 allowance but will have to file a tax return.
https://www.expertsforexpats.com/expat-resources/b...
https://www.expertsforexpats.com/expat-resources/b...
We did this back in 2017 having been overseas for 8 years but moved back to the UK within a year of the UK purchase. If they are not planning to actually move back in a fairly short period of time then in addition to the income tax on rental income mentioned above there will be other taxes and charges involved too.
If they already own the property where they live in Australia then they will have to pay the 5% second home stamp duty charge, although this can be recovered if they move into the UK home within a set period of time. From memory it used to be a year but this may have now reduced.
The period of time when it wasn't their main residence will also qualify for CGT when they eventually sell it but again various time based exemptions and reductions could apply.
The time period before they actually return is also relevant from a purchase type perspective as a long term rental/growth property might be very different to the type/location of somewhere they might want to live on their return.
If they already own the property where they live in Australia then they will have to pay the 5% second home stamp duty charge, although this can be recovered if they move into the UK home within a set period of time. From memory it used to be a year but this may have now reduced.
The period of time when it wasn't their main residence will also qualify for CGT when they eventually sell it but again various time based exemptions and reductions could apply.
The time period before they actually return is also relevant from a purchase type perspective as a long term rental/growth property might be very different to the type/location of somewhere they might want to live on their return.
Deep Thought said:
My son and his (soon to be) wife have both lived in Sydney for 7+ years.
They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
Where in the UK as SDLT in England is different from LBTT in Scotland?They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
I understand they would be landed with an additional 5% over SDLT for second home plus another 2% for being non-UK resident. Probably the same in Scotland but % may vary.
The letting agent should collect tax for HMRC as part of a particular scheme.
I think they have 36 months in England and 18 months in Scotland to sell their previous main residence and reclaim the additional home %.
It is worth remembering that the rules on renting are changing here so it may take quite a time to get the house back if rented out
Average returns for rentals are about 4- 5% so it’s not a goldmine and you are assuming exchange rate stays flat
If they have a particular area they want to move to, it might be worth waiting for a unicorn property to turn up
Good luck
Average returns for rentals are about 4- 5% so it’s not a goldmine and you are assuming exchange rate stays flat
If they have a particular area they want to move to, it might be worth waiting for a unicorn property to turn up
Good luck
Deep Thought said:
My son and his (soon to be) wife have both lived in Sydney for 7+ years.
They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
They do have tw decisions to make, Investment and Finance. First, they might find a property that might be an ideal investment. Than financial decision, in terms of tax and etc..They plan to come home "at some point", but in advance of that want to buy a house in the UK.
They would seek to rent that out until such times as they come home.
It would be a cash purchase, so no mortgage required. They would aim to use a letting agent to manage it.
I / they "assume" there would be UK tax implications on the rental income in doing so?
Its all a tentative plan at this point, but they want to at least have some info at hand in terms of implications.
FYI, I have family who live in Sydney too, they have done these before and decided to buy another property in Sydney (Rental). Their final decision was, if they would ever come back to Europe(god forbid,
) for retirement or whatever, they would use properties in Australia for income generation and rent somewhere here.As I said, these are quite specific outcomes depending on people's financial conditions.
Panamax said:
What these people need is a decent financial adviser. One fully familiar with expats.
Yes, they will be doing that. They have one to help them manage their finances in Aus, but not back here.At the moment, they are just info gathering and getting an understanding of what they want themselves before approaching a FA here.
ooid said:
They do have tw decisions to make, Investment and Finance. First, they might find a property that might be an ideal investment. Than financial decision, in terms of tax and etc..
FYI, I have family who live in Sydney too, they have done these before and decided to buy another property in Sydney (Rental). Their final decision was, if they would ever come back to Europe(god forbid,) for retirement or whatever, they would use properties in Australia for income generation and rent somewhere here.
As I said, these are quite specific outcomes depending on people's financial conditions.
Yes, personally i'd have thought they'd have been bettering buying there, particularly as there seems to be some quite some incentives for first time buyers out there.FYI, I have family who live in Sydney too, they have done these before and decided to buy another property in Sydney (Rental). Their final decision was, if they would ever come back to Europe(god forbid,
) for retirement or whatever, they would use properties in Australia for income generation and rent somewhere here.As I said, these are quite specific outcomes depending on people's financial conditions.
skyebear said:
Where in the UK as SDLT in England is different from LBTT in Scotland?
I understand they would be landed with an additional 5% over SDLT for second home plus another 2% for being non-UK resident. Probably the same in Scotland but % may vary.
The letting agent should collect tax for HMRC as part of a particular scheme.
I think they have 36 months in England and 18 months in Scotland to sell their previous main residence and reclaim the additional home %.
They're from N. Ireland but again its up for debate as to where they would buy back home. It doesnt need to be NI.I understand they would be landed with an additional 5% over SDLT for second home plus another 2% for being non-UK resident. Probably the same in Scotland but % may vary.
The letting agent should collect tax for HMRC as part of a particular scheme.
I think they have 36 months in England and 18 months in Scotland to sell their previous main residence and reclaim the additional home %.
Another option would be to buy in Ireland.
Its really just early days at the minute so they're just trying to broadly understand issues they might face before talking seriously to an IFA here.
Gassing Station | Finance | Top of Page | What's New | My Stuff