Remortgaging overseas (Australia)
Discussion
Hopefully a quick easy one...
I have a property in Melbourne and would like to remortgage it to the value of around $110,000.
If I then transfer this lump sum to the UK - am I liable for any form of tax?
Not sure if it's relevant but the property is rented and I pay tax on the rental income in Aus.
I have a property in Melbourne and would like to remortgage it to the value of around $110,000.
If I then transfer this lump sum to the UK - am I liable for any form of tax?
Not sure if it's relevant but the property is rented and I pay tax on the rental income in Aus.
Where are you tax domicile?
If its Oz then you should be OK and not have any tax implication other then not being able to claim the remortgaged amount's interest as a negative gearing tax deduction. You might get a phone call from AusTrack for a please explain about the transfer as the amount is over A$10K, but you should be ok. There should be no tax implication from the UK HMRC.
If you are domicile in the UK then you might have some problems if you had not notified HMRC that you have overseas asset and income even though you have declared it in Oz. If you have declared it then you will not be able to claim the remortgage interest as a deduction. If you give the money away then you also have the 7 year inheritance tax rule to deal with as well. You might also get a call from AusTrack about the transfer as well and they might pass you information to HMRC.
If its Oz then you should be OK and not have any tax implication other then not being able to claim the remortgaged amount's interest as a negative gearing tax deduction. You might get a phone call from AusTrack for a please explain about the transfer as the amount is over A$10K, but you should be ok. There should be no tax implication from the UK HMRC.
If you are domicile in the UK then you might have some problems if you had not notified HMRC that you have overseas asset and income even though you have declared it in Oz. If you have declared it then you will not be able to claim the remortgage interest as a deduction. If you give the money away then you also have the 7 year inheritance tax rule to deal with as well. You might also get a call from AusTrack about the transfer as well and they might pass you information to HMRC.
Edited by onny on Thursday 4th December 01:46
Firstly - there is no tax payable on the AS$100,000 when it is moved from Aus to the UK. Money can be freely transferred between countries.
Secondly - once the money is invested in the UK, any income it generates, such as interest, dividends, rents etc will be subject to UK tax.
Thirdly - and the point raised by the first reply, is that it does seem like you own a property in an overseas country. If that property was generating rental income for you and you are a UK tax resident, then there is a possibility that you might be liable to UK tax on any rents generated by the overseas property or Capital Gains Tax if and when that property is eventually sold.
The general position is that UK tax residents are liable to UK tax on their WORLDWIDE income, whether they bring that income back to the UK or not.
If they pay tax on that specific in the foreign country where the income is generated, they will receive a Tax Credit taking this tax already paid for offset against any UK tax that may be due.against.
This only applies where the country has a Double Taxation Agreement with the UK - which Australia does.
It also implies that you should be completing a Self Assessment tax return each year declaring this Australian income and offsetting the Australian Tax.
Matters get a bit more complicated if, as well as being a UK Tax Resident, you possess an Australian domicile (i.e. you were born in Australia).
Secondly - once the money is invested in the UK, any income it generates, such as interest, dividends, rents etc will be subject to UK tax.
Thirdly - and the point raised by the first reply, is that it does seem like you own a property in an overseas country. If that property was generating rental income for you and you are a UK tax resident, then there is a possibility that you might be liable to UK tax on any rents generated by the overseas property or Capital Gains Tax if and when that property is eventually sold.
The general position is that UK tax residents are liable to UK tax on their WORLDWIDE income, whether they bring that income back to the UK or not.
If they pay tax on that specific in the foreign country where the income is generated, they will receive a Tax Credit taking this tax already paid for offset against any UK tax that may be due.against.
This only applies where the country has a Double Taxation Agreement with the UK - which Australia does.
It also implies that you should be completing a Self Assessment tax return each year declaring this Australian income and offsetting the Australian Tax.
Matters get a bit more complicated if, as well as being a UK Tax Resident, you possess an Australian domicile (i.e. you were born in Australia).
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