Property in South Africa - tax implications

[pecan]

I have a property in South Africa, which is being rented out. I am curious about the tax implications in the UK on the rental received. At the moment the house has a homeloan (mortgage), and we wanted to settle the debt before we leave. Now I'm wondering if it would be better to leave the mortgage in place, thereby reducing the taxable income, and the possible tax when we sell it in 18 months. (When the lease expires)

Does anyone have any experience with this?

[John]

In order to answer your reasonable question it is necessary to establish a lot more about you. Do you know where your domicile is? Are you ordinarily resident in the UK for tax purposes?

In short, please tell us your nationality? And how much time have you spent in the UK in the past?

[pecan]

I am still in South Africa. We have applied for an ancestry visa, and will then sell some or all of our properties, in order to go to the UK. We intend to stay in the UK for 2 to 5 years.
It is almost 20 years since I was last there for about 4 months. I am South African, and my husband is Macedonian.
Thanks.

[John]

Pecan you will not be taxable in the UK on the SA rental income .... as long as you do not remit that rental income to the UK. But if you do bring the money into the UK you will indeed need to pay UK tax on it.

[pecan]

Thanks John. What about when we sell the property, which will be while we are still in the UK? Is there a lower limit set on Capital gains tax?

My logic tells me to leave the property with its debt here in SA, in order to reduce the net cash received in 18 months, in order to reduce the taxable amount. But it's not ideal - we'd rather just pay the mortgage off. And at what point does capital become taxable at all? I mean - if we're taking all our worldly goods and cash over, we can't possibly be taxed on what we initially take into the UK... so would the house left behind be considered a part of that initial capital?

Further - if the income is taxable in South Africa, is it further taxable (a second time) in the UK, or is the difference is tax calculated? When I first studied tax law in South Africa, about 30 years ago, We were told that income that was taxed elsewhere in the world was subjected to South African tax rates, with a credit for tax paid at the source.

Cathy

[kawasaki1]

It might be worth posting this query on an accounting or tax planning forum of some sort as people here generally know more about immigration than financial matters.

Dual tax treaties between countries, UK domicile etc are often complex matters so even talking to a tax advisor might be worth it.

[John]

kawasaki1, I was just thinking that. The subject of this topic is really well outside the scope of this board.