Tax on rental income/IHT in Oz/Uk advice please!

lonelyinlondon

Hello there!

I would appreciate some advice on my current situation.

My husband's (dual Oz/Uk nationality) mum died 3 years ago in Australia (where she lived). After 3 long years he has finally managed to sell her house on the outskirts of Sydney. This will give us 70000 pounds,

I have a small flat with a mortgage of 67000, that I currently rent out. We own no other property and are renting ourselves atm.

Our plan is to pay off this mortgage in full (yey!).

Here come the questions!
1. Does anyone know if he will have to pay inheritance tax in either country, or how we could find out?
2. How do I declare the rental income to the Inland Revenue?

Thanks for listening!

LiL

fengirl_2

IHT may be payable in Oz - you would have to ask an Oz tax specialist this question. No IHT in the UK as from what you are saying the mum was resident and domiciled in Oz.
You declare your rental income by ringing your tax ofice and asking for a self assessment form to include the income from property pages. You complete this with all your income and any tax due will be payable on 31 Jan (assuming you mean the income was for 08-09).

dori2o

Unfortunately the rules have changed, Income from property can no longer be notified by telephone,you have to write in with the information to you local tax office so they can set up a new self assessment record for you and issue the forms.

If you already complete self assessment forms,simply download and complete the Property Income pages.

John_Pierpoint

You probably need to read up on the HMRC web site (and on here) to get a feel for the rules and relief's for rental income. If the rent just covers the expenses (mortgage interest, collection fees? 10% for wear and tear on furnishings? etc.) It might make sense to put the capital towards a home to live in free of rent? However it won't go far in London, we don't know if property prices have bottomed, we don't know your age or life plans etc etc.

James_Trimby

Remember you should be able to get tax relief on the loan interest you are paying on the mortgage at the moment (assuming borrowed to buy the property in the first place). If you are thinking of buying in the future or thinking of borrowing in the future for anything else you might be better off trying to find some good tax fee savings for the monies and keeping some or all of the mortgage. If not then forget the tax saving and pay it off, a little tax saved will always be less than the interest!

lonelyinlondon

Thankyou everyone for your replies.

We paid off the mortgage yesterday-a great feeling! At least my husband can now have some closure as the whole thng was tragic.

As for the tax, there will be no IHT in Oz as they don't have it.

Being a teacher I do PAYE so have never had to worry about this stuff!

I started renting out my place in 2008 (August) but have not paid tax on earnings from that as it was not that much (250 approx per month not deducting interest etc). I hope that was not naive of me to assume that.

Now I am getting a much bigger return from 1/11/09 I am assuming as people have said that I will have to get in touch with the tax office. Is the self assessment business complicated? I am getting worried that I have not declared it so far. The Jan31 one, is that Jan 09 to Jan 10? I thought it all had to be done in April!!!!!!!!!!!!!!1

Sorry for being an idiot about this , I am living and learning!
Thanks.

fengirl_2

You have until 31 October to declare the rental income for the year ended 5 April 2009. the tax has to be paid by 31 Jan 2010. You therefore need to write to your tax office asap to tell them you have this income and to ask for an SA. I assume you have receipts for all the property expenditure?