Tax on House Rental while Living Abroad?

[LC23]

AshVX220 said:

Wow, what?!?!? So I won't pay income tax on my salary? Damn, that would be awesome! Just tax on purchases?

Hold your horses there cowboy (OK you aren't going to Texas but anyway). State income tax yes, there is still Federal income tax. Plus you still don't know how you are actually going to be taxed as you haven't checked the tax equalisation point.

[AshVX220]

LC23 said:

Hold your horses there cowboy (OK you aren't going to Texas but anyway). State income tax yes, there is still Federal income tax. Plus you still don't know how you are actually going to be taxed as you haven't checked the tax equalisation point.

Ah, right gotcha. Damn, I got all excited there!

Thanks very much for taking the time to reply here, it's very much appreciated, just need to find out the tax rates now (federal) and the equalisation thing.

[LC23]

AshVX220 said:

Ah, right gotcha. Damn, I got all excited there!

Thanks very much for taking the time to reply here, it's very much appreciated, just need to find out the tax rates now (federal) and the equalisation thing.

You also need to know how you will be filing in the US. Generally speaking if you can file MFJ (married filing joint) then this will mean your income will take longer to reach the top rates of tax. Something else to cover off with your tax advisor.

[V41LEY]

As said - any overseas move should come with free access to tax experts. If not negotiate. In our case (Singapore), we were paid locally, so only had rental income as income in the UK. Don't think it was enough to attract additional tax. Don't forget you can deduct management fees, insurance, repair costs etc. Think we registered as non- residents as well.

[AshVX220]

V41LEY said:

As said - any overseas move should come with free access to tax experts. If not negotiate. In our case (Singapore), we were paid locally, so only had rental income as income in the UK. Don't think it was enough to attract additional tax. Don't forget you can deduct management fees, insurance, repair costs etc. Think we registered as non- residents as well.

Excellent, cheers V41LEY. We will have access to a tax expert, I'm just trying to ease my panicking wife's mind!

[Eric Mc]

V41LEY said:

Don't think it was enough to attract additional tax.

That sounds worryingly vague.

[superlightr]

you will also be liable for NRL tax (non resident landlord tax on the rental) income less expenditure unless you/agent/tenant are and are granted an exemption certificate. form NRL1 from HMRC this is in addition to all and any other taxes. will take 1 month to process

[AshVX220]

superlightr said:

you will also be liable for NRL tax (non resident landlord tax on the rental) income less expenditure unless you/agent/tenant are and are granted an exemption certificate. form NRL1 from HMRC this is in addition to all and any other taxes. will take 1 month to process

Isn't that what I mean by income tax on my rent, or is that in addition to income tax on the rent?

[Eric Mc]

In some cases, agents are instructed to deduct 20% tax from the GROSS rentals they collect. You will get a credit for this against any actual tax liability arising from the rental profits.

[AshVX220]

Eric Mc said:

In some cases, agents are instructed to deduct 20% tax from the GROSS rentals they collect. You will get a credit for this against any actual tax liability arising from the rental profits.

Thanks Eric, what if I'm not going through a rental agency (it currently looks like a family member may rent our house off us, negating the need of getting an agency involved.

[superlightr]

AshVX220 said:

Eric Mc said:

In some cases, agents are instructed to deduct 20% tax from the GROSS rentals they collect. You will get a credit for this against any actual tax liability arising from the rental profits.

Thanks Eric, what if I'm not going through a rental agency (it currently looks like a family member may rent our house off us, negating the need of getting an agency involved.

the agent or tenant must by law deduct NRL tax at 20% unless they receive an exemption certificate. have a look at the HMRC website. Penalties and fines for the tenant or agent if they don't.

Why if you don't know anything about letting are you thinking about DIYing ? get a proper agency who is NARLS/Arla registered to help set things up correctly.

[superlightr]

Eric Mc said:

In some cases, agents are instructed to deduct 20% tax from the GROSS rentals they collect. You will get a credit for this against any actual tax liability arising from the rental profits.

can I change the emphasis please - In ALL cases the agent/tenant MUST deduct NRL tax unless exemption cert issued to them for overseas landlords - that's the default position.

[h0bbsy]

If you trust your wife you could do a Declaration of Trust splitting it as 99pc hers and 1pc yours then complete a hmrc form 17 to reflect this. The tax on rental income would follow this split.

[CrouchingWayne]

Do you have other taxable income in the UK? If not, depending on rental value, will your personal allowance not cover the taxable element of the rents? At work there was a lot of discussion around this for a colleague who moved abroad (Middle East, so may be different) who is renting their house out and utilising their personal allowance, it had a knock on impact on filings the company was doing for any days working back in the UK (short term business visitors) so was relevant to the companies interests as well. Might be worth clarifying (even internally first) with the tax guys.