We have 2 flats in the UK one is nominated as our primary residence but both are rented out as we are in the British Forces.We are moving to Australia in 2006 and would like to retain the properties as rent is just short of mortgage and now the mortgage is being paid off ,so they are basically running themselves.My husband will gain citizenship within approx 3 months as joining forces and i will have residency.I have heard that the rent on these properties will be liable for tax of possibly 47% once in Australia as they won't take into account the mortgage even though one is our primary residence and we will be renting for the first year in Oz.Can anyone confirm this or is there anyway around it eg putting the properties in my name or putting the mortgage with an ozzie bank.I read some where about just having an interest mortgage but as both of our flat prices have reached their ceiling or will only slowly increase the advantage of keeping them would be paying the mortgage off.Is it a good idea to keep them ? or even one or will we loose money.Any ideas gratfully received.
Helen

Emma

Hello.

From what I have read, I believe that you are in "seek professional advice" territory. As you have 2 properties there will almost certainly be Australian tax implications on one of them (at least?) and you need sound advice regarding your possible options.

There are numerous good agents who should be able to assist you with this, not least on the site on which this forum is based !

Regards and good luck

Jim

Jim
Thanks for the advice,I thought we may have to go through an agent but just hoped to get some ideas
Thanks

Only you can decide wether it's worthwhile keeping them.

BUT your mortgage interest payments can be offset against your rental income in Oz. You can also claim expenses, depreciation, and rates against your rent income, and so you would be unlikely be liable for any tax on the rent in Oz.

If you have lived in one of the flats you can claim this as your principle place of residence for up to 6 years (providing you don't buy and claim that as you PPOR) and avoid any CGT on that property when you sell.

Your second flat would be liable for CGT when you sell but it would only be on the gain from the time you become resident in Oz (not from when you purchased it).

Also you'd be better off converting both mortages into interest only as any capital repayment is NOT tax deductable.