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-   -   Declaring Uk home for tax benefits (https://www.englishforum.ch/finance-banking-taxation/300648-declaring-uk-home-tax-benefits.html)

NewInSchwyz 13.10.2020 17:29

Declaring Uk home for tax benefits
 
I m quite new here so I hope someone can at least set out their circumstances to help me decide what to do

I have a property in the Uk and it is empty. Cost was 1.2 million sterling and mortgage is 750k left. The interest to service the mortgage is 1k a month

I am confused about whether it is a net benefit or negative to my tax return which I plan to do.

On the one hand I heard maintenance insurance and utilities can be deducted and those can amount to 10k a year easily. Fitting a new kitchen etc could easily cost 50k

On the other hand I am taxed as renting this out from myself

Does anyone have any figures they can share about whether having a 1.2 house in London would result in income and therefore tax increasing or decreasing. Wealth tax is peanuts so thatís not relevant to this discussion

fatmanfilms 13.10.2020 17:33

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226145)
I m quite new here so I hope someone can at least set out their circumstances to help me decide what to do

I have a property in the Uk and it is empty. Cost was 1.2 million sterling and mortgage is 750k left. The interest to service the mortgage is 1k a month

I am confused about whether it is a net benefit or negative to my tax return which I plan to do.

On the one hand I heard maintenance insurance and utilities can be deducted and those can amount to 10k a year easily. Fitting a new kitchen etc could easily cost 50k

On the other hand I am taxed as renting this out from myself

Does anyone have any figures they can share about whether having a 1.2 house in London would result in income and therefore tax increasing or decreasing. Wealth tax is peanuts so thatís not relevant to this discussion

Unlimited Mortgage interest is tax deductible in CH, I am surprised you are being taxed for personal use of a foreign property, you must have put it in the wrong Canton.

HickvonFrick 13.10.2020 17:36

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by fatmanfilms (Post 3226148)
Unlimited Mortgage interest is tax deductible in CH, I am surprised you are being taxed for personal use of a foreign property, you must have put it in the wrong Canton.

My wife owns a leasehold flat in London, and we are expecting a very large service charge next year - around £50,000 (substantial structural works).

Would that be tax deductible? (Are service charges in general tax deductible?).

FWIW she rents it out for around £25,000 a year. I also own a flat in London that I rent out for about £15,000 a year.

NewInSchwyz 13.10.2020 17:37

Re: Declaring Uk home for tax benefits
 
Thanks Farman. Was hoping you would reply as you seem to know your stuff

I know the mortgage interest (not the repayment) is deductible. But donít you also get charged a rent in benefit and therefore if owning a property which is heavily mortgaged does this normally reduce your tax liability or increase it

fatmanfilms 13.10.2020 17:55

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226150)
Thanks Farman. Was hoping you would reply as you seem to know your stuff

I know the mortgage interest (not the repayment) is deductible. But don’t you also get charged a rent in benefit and therefore if owning a property which is heavily mortgaged does this normally reduce your tax liability or increase it

For properties in CH yes, foreign properties no.
Quote:

Originally Posted by HickvonFrick (Post 3226149)
My wife owns a leasehold flat in London, and we are expecting a very large service charge next year - around £50,000 (substantial structural works).

Would that be tax deductible? (Are service charges in general tax deductible?).

FWIW she rents it out for around £25,000 a year. I also own a flat in London that I rent out for about £15,000 a year.

I think structural works would be deducted from eventual CGT.
Repainting Stucco etc would be a normal repair so deductible against rental income for tax purposes even in the UK where interest deduction is limited. All costs such as agents fees, insurance etc should also be deductible against rental income

NewInSchwyz 13.10.2020 18:03

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by fatmanfilms (Post 3226157)
For properties in CH yes, foreign properties no.


I think structural works would be deducted from eventual CGT.
Repainting Stucco etc would be a normal repair so deductible against rental income for tax purposes even in the UK where interest deduction is limited. All costs such as agents fees, insurance etc should also be deductible against rental income

For properties in CH yes, foreign properties no - Are you sure about that - This is highly relevant for me - Can I make an appointment to go tp my canton tax office or do they not really offer this?

Are you saying that if the UK house is empty all costs including interest can be deducted from your income and you pay no "rent" on this amount?

Are there any other threads where this has been dicussed?

fatmanfilms 13.10.2020 18:05

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226158)
For properties in CH yes, foreign properties no - Are you sure about that - This is highly relevant for me - Can I make an appointment to go tp my canton tax office or do they not really offer this?

Are you saying that if the UK house is empty all costs including interest can be deducted from your income and you pay no "rent" on this amount?

Are there any other threads where this has been dicussed?

Talk to the tax office, they don't bite.

If you don't rent it out, you can still deduct any interest you pay against Swiss tax assuming you are allowed to do a tax return.

NewInSchwyz 13.10.2020 18:31

Re: Declaring Uk home for tax benefits
 
Thank you fatman - I will call them - Do they usually know their stuff and are they helpful - HMRC dont really and just tell you talk to someone else

I cannot believe that you can have a house withouty them taxing it as a benefit in kind - And from the tax calautor if I plug in the numbers it ends up being further tax to pay

I entered the pauscal and mortgage debt

fatmanfilms 13.10.2020 18:35

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226174)
Thank you fatman - I will call them - Do they usually know their stuff and are they helpful - HMRC dont really and just tell you talk to someone else

I cannot believe that you can have a house withouty them taxing it as a benefit in kind - And from the tax calautor if I plug in the numbers it ends up being further tax to pay

I entered the pauscal and mortgage debt

They are very helpful, I always went to the office in ZH, I would start in German & they would usually switch to English. They aim to be helpful which you will find odd having dealt with HMRC.

All interest is deductible, regardless of the reason for the debt.
I cant remember the canton code for foreign property it may be AUS

newtoswitz 13.10.2020 18:40

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226174)
I cannot believe that you can have a house withouty them taxing it as a benefit in kind

Why?

If you're not living in it there's no benefit, if you rent it out the rental counts as income and you get taxed.

If you do live in it, they do charge you a theoretical rental value for the benefit, but obviously that only applies if the house is in Switzerland.

For the structural / any work, you can claim for maintenance but not for enhancement, so replacing windows (if they are old) yes, adding a conservatory no.

ps they do tax the net value in the wealth tax

NewInSchwyz 13.10.2020 18:48

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by newtoswitz (Post 3226179)
Why?

If you're not living in it there's no benefit, if you rent it out the rental counts as income and you get taxed.

If you do live in it, they do charge you a theoretical rental value for the benefit, but obviously that only applies if the house is in Switzerland.

For the structural / any work, you can claim for maintenance but not for enhancement, so replacing windows (if they are old) yes, adding a conservatory no.

ps they do tax the net value in the wealth tax

Thanks so much - The net wealth on 500K is very very little - a few hundred francs ....

Can council tax / utilitiy bills / insurance be deducted? And dont they just apply a 20% maintance allowance ?

NewInSchwyz 13.10.2020 18:49

Re: Declaring Uk home for tax benefits
 
i ve tried doing a search but i cannot see this discussed previoulsy - Is it possible that this is the first time this has come up on englishforum?!

HickvonFrick 13.10.2020 18:55

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226183)
Thanks so much - The net wealth on 500K is very very little - a few hundred francs ....

Can council tax / utilitiy bills / insurance be deducted? And dont they just apply a 20% maintance allowance ?

Why don't you rent it out?

newtoswitz 13.10.2020 19:04

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226183)
Thanks so much - The net wealth on 500K is very very little - a few hundred francs ....

Can council tax / utilitiy bills / insurance be deducted? And dont they just apply a 20% maintance allowance ?

Property insurance yes, the others no.

I think the maintenance allowance only applies to the property you live in, others have to be actual values because the allowance is 20% of the imputed rental value, not the property value.

And note it's 10% for a property less than 10 years old.

NewInSchwyz 13.10.2020 19:08

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by newtoswitz (Post 3226189)
Property insurance yes, the others no.

I think the maintenance allowance only applies to the property you live in, others have to be actual values because the allowance is 20% of the imputed rental value, not the property value.

And note it's 10% for a property less than 10 years old.

Very helpful - The house is 50 years old so 20% of rent is signifcant - Imputed rent is at least 4K CHF a month or 3.5GBP

Maintenance and insurance is at least 10K CHF a year - So this could well nknock off 20K CHF off my income which should mean a tax saving

Why dont I rent it out ? :) Its my house and i really use it from time to time - Over christmas I ll be there for a month

HickvonFrick 13.10.2020 19:32

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by NewInZurichTown (Post 3226191)
Very helpful - The house is 50 years old so 20% of rent is signifcant - Imputed rent is at least 4K CHF a month or 3.5GBP

Maintenance and insurance is at least 10K CHF a year - So this could well nknock off 20K CHF off my income which should mean a tax saving

Why dont I rent it out ? :) Its my house and i really use it from time to time - Over christmas I ll be there for a month

I Presume you are aware of the tax/domicile implications of keeping it for your own use?

NewInSchwyz 13.10.2020 19:38

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by HickvonFrick (Post 3226196)
I Presume you are aware of the tax/domicile implications of keeping it for your own use?

Yes I do know - I have a full time job no wife or kids - There is only one tie to the uk less than 90 days a year

So yeah I know about this

fatmanfilms 13.10.2020 19:44

Re: Declaring Uk home for tax benefits
 
Quote:

Originally Posted by HickvonFrick (Post 3226196)
I Presume you are aware of the tax/domicile implications of keeping it for your own use?

For someone with a full time job in CH who spends less than 91 days in the UK, working in the UK less than 31 days, it's irrelevant.
Even with counting connections, available accommodation is the same if you stay in a hotel or at a relatives house for 14 days.

Gravity 13.10.2020 20:00

Re: Declaring Uk home for tax benefits
 
I also have property abroad, that's not a problem whatsoever. Up to my knowledge, even if I had two different jobs, one abroad, one in Switzerland, spend some months here, some there, still my tax residency is where I spend more days throughout the year. Back in 2008 I was sent to the US for 8 months, I had to file my taxes there!

NewInSchwyz 13.10.2020 20:04

Re: Declaring Uk home for tax benefits
 
Farman you are amazing knowledge thank you

If we can go back to the question can someone help me understand the tax saving so I can see if itís worth it

Income after deductions pillar 2 contributions pillar 3 etc is 100k. Before those deductions gross salary is 150k

House worth 1.2 million gbp
Mortgage debt 750k gbp
Rental value 3.5k gbp a month
Insurance and maintenance 5k gbp


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