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lebron_virji(Newbie)Newbie
5 Nov 2024

I currently live in Australia and am an Australian citizen. I am moving to London for 3-4 years (after which I'll return to Australia) and would like to purchase an investment property before I leave. Once I'm in London and am earning a UK income, is it possible to deduct rental losses on my Australian property against my UK income (ie negative gear against a UK income)? I am not earning any other income in Australia. One accountant has told me this isn't possible, while another has said that UK income can be classified as worldwide income and therefore the losses on the property can be deducted.

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Taxduck(Taxicorn)Taxicorn
5 Nov 2024

Depends whether you remain as a tax resident of Australia (so deductible) or a foreign resident. As a foreign resident you would not include your UK income on your tax return.

You need to first determine your tax residency

Your tax residency | Australian Taxation Office


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Irisheyes47(Champion)Champion
6 Nov 2024

You are likely to be a resident of the UK under the statutory residence test. The UK tax legislation does not allow rental losses against other income, so for UK tax purposes you cannot offset the loss. Also, the UK does not give a deduction for interest on a rental property. Instead, the amount of interest x basic tax rate (20%) is given as a 'tax reducer' BUT the relief is restricted to the lower of rental profits x 20% and your finance costs x 20%.

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