Australian Property Taxes for Non-Residents in the UK
Odin Tax helps Australian property owners in the UK with their Australian property taxes. We provide specialised expertise, streamlined processes, and a strong support network.
- Specialised Expat Tax Guidance: Registered tax agents who help UK-based Australians work through the tax rules that apply to them.
- Effortless Tax Compliance: Efficient systems to ensure your tax filings are accurate and on time, without hassle.
- All-Inclusive Service Package: Ongoing, year-round support beyond tax filing.
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The Ultimate Expat Tax Advantage Bundle
Discover the ultimate resources to maximise your property investments and streamline your expat tax obligations.
We handle your Australian tax returns and provide registered tax agent services, including tax return preparation and general guidance, compliance services, and strategic planning to help you understand which deductions and offsets may apply to your situation.
Key Takeaways
- Tax Residency is Pivotal: Your categorisation by the ATO as either a resident or non-resident for tax purposes significantly impacts your Australian tax liabilities.
- Tax Considerations: Australians living overseas must navigate a complex web of property-related taxes, including taxes on rental income, capital gains from property sales, and potential state-based levies like stamp duty or land tax.
- Working With a Tax Professional: International tax situations are intricate, and a registered tax agent such as Odin Tax can explain your lodgement obligations and the deductions you may be eligible to claim.
AU Tax Implications for Australian Expats in the UK
Residency Status
Your residency status affects your tax obligations in Australia. As an expat in the UK, you’re likely a non-resident for tax purposes, meaning you’re only taxed on Australian-sourced income.
For example, earning AUD 50,000 from a rental property in Sydney means you must declare this income on your Australian tax return as a non-resident.
If the Australian Taxation Office (ATO) considers you a resident, you must declare and pay taxes on your worldwide income.
Note: Several factors, such as your ties to Australia and the length of your stay abroad, determine your residency status.
Income Tax
Non-residents are taxed at higher rates and don’t benefit from the tax-free threshold that residents enjoy. You’ll be taxed on income such as rent from property, dividends, and capital gains from Australian assets.
For example, As a non-resident, a 30% tax rate applies to rental income up to AUD 135,000 without a tax-free threshold.
| Taxable Income | Applicable Tax |
|---|---|
$0 – $135,000 | 30% |
$135,001 – $190,000 | $40,500 plus 37% |
$190,001 and above | $60,850 plus 45% |
Foreign Resident Tax Rates 2025-26
Capital Gains Tax (CGT)
You’re subject to CGT on taxable Australian property, like real estate. Selling an Australian property may require you to pay CGT. Specific rules and potential exemptions, such as the main residence exemption, may not apply to non-residents.
For example, Selling a Melbourne property for AUD 800,000, initially bought for AUD 500,000, incurs a CGT on the AUD 300,000 gain, with limited exemptions for non-residents.
Negative Gearing
Negative gearing allows you to deduct the costs of owning an investment property from your overall income, reducing your taxable income. Non-residents can still benefit from negative gearing, but it’s crucial to ensure proper structuring and compliance with Australian tax laws.
For example, if your rental income is AUD 20,000 and expenses are AUD 25,000, the AUD 5,000 loss can offset other taxable income, reducing your overall tax liability.
Stamp Duty
When buying property in Australia, additional stamp duties may apply depending on the state where the property is located.
For example, in New South Wales, foreign buyers face an extra 8% stamp duty surcharge in addition to standard rates.
Tax Filing Requirements
As a non-resident expat in the UK, you must lodge an Australian tax return if you have taxable Australian income, including income from employment, investments, or capital gains.
For example, earning AUD 10,000 from unfranked dividends and AUD 30,000 from rental income requires reporting both in your tax return.
Foreign Income
Generally, you don’t need to report foreign income to the ATO. However, if you become a resident again, you must include all income, including foreign-sourced, in your Australian tax return.
Note: Keep comprehensive records of foreign income as they are necessary if your residency status changes.
What Happens If You Don't File an Australian Tax Return?
Penalties and Interest
Late tax returns incur penalties from the Australian Taxation Office (ATO). The fine is one penalty unit for each 28-day period overdue, up to a maximum of 5 units. As of July 2024, each unit is $364, so the maximum fine for late filing is $1,820.
Legal Action
Continual failure to file a tax return can lead to legal action by the ATO, which may include garnishing wages, seizing assets, or other measures to recover unpaid taxes.
Loss of Entitlements
Not lodging a tax return can result in the loss of entitlements and credits, such as tax offsets and the ability to carry forward losses.
Increased Scrutiny
The ATO may closely examine your financial affairs, leading to audits or investigations. This process can be stressful and time-consuming and may result in additional penalties and interest if discrepancies are found.
Compounding Issues
Ignoring tax obligations can cause problems to compound over time, resulting in larger penalties and interest charges, making it more challenging to resolve the tax debt.
Impact on Future Residency Status
Unresolved tax issues can complicate future plans to return to Australia and may affect residency applications or other dealings with Australian government departments.
Reputation
Failing to comply with tax obligations can harm your personal and professional reputation, particularly if you are involved in business or professional activities that require good standing with tax authorities.
Applying for an Australian Tax Return from the UK
Do It Yourself
You can definitely file your own AU tax return as an Aussie expat in the UK. However, you can face a few setbacks and hurdles.
Tax Knowledge
Understanding your residency status and its impact on taxes is crucial. Mistakes here can lead to penalties. Handling foreign income, capital gains tax, and other expat tax issues requires in-depth knowledge and record-keeping.
Time Commitment
Gathering documents, figuring out deductions and credits, and ensuring accuracy takes time. Errors can cause delays, extra paperwork, or audits, adding stress and hassle.
Deductions and Credits
Without professional help, you might overlook deductions and credits that could lower your tax bill. This could mean paying more than you owe.
Support Access
You won’t have access to expert advice and support if you run into problems or have questions during the filing process.
Get It Done for You
On the other hand, a specialist tax agent can make it all easier for you.
Specialist by Your Side
A registered tax agent knows how expat tax rules operate and can explain how they apply to your circumstances.
Compete Package
They handle everything from return preparation to strategic tax planning and ongoing support.
Complete AU Tax Solution for Non-Residents in the UK
Odin Tax is here to get you through all your tax issues effortlessly. Here’s how we help:
Enjoy more time to file your return for added peace of mind.
Get clarify on how Australian tax rules apply to your income and property.
Our team supports you from your first enquiry through to lodgement.
Access webinars, personalised consultations, and a wealth of educational materials.
Contact our expat tax team to experience this hassle-free tax service!
FAQs About Australian Property Taxes for Non-Residents in the UK
Are there any tax exemptions or benefits I qualify for?
Here are the exemptions and benefits Australian expats in the UK may qualify for regarding Australian tax.
- Main Residence Exemption for Capital Gains Tax (CGT): If you sell your main residence in Australia, you may be eligible for a partial or full exemption from CGT, even as a non-resident, provided specific conditions are met.
- Foreign Income Exemption: As a non-resident, you’re generally not taxed on foreign income earned while living abroad. This means you don’t need to report income from your job in the UK to the Australian Taxation Office (ATO).
- Tax Offsets and Credits: You may be eligible for certain tax offsets and credits that can reduce your tax liability. For example, the foreign income tax offset can be claimed if you have paid tax on foreign income in another country.
- Negative Gearing Benefits: If you own investment property in Australia, you can deduct the costs associated with owning the property from your Australian-sourced income. This includes interest on loans, property management fees, and maintenance costs, which can reduce your overall taxable income.
- Superannuation Contributions: Contributions made to your Australian superannuation fund are generally not taxed until you withdraw them. Moreover, certain contributions may qualify for tax deductions.
- Temporary Resident Status Benefits: If you’re considered a temporary resident, you are generally only taxed on income derived from Australian sources and not on foreign income.
- Main Residence Absence Rule: If you move overseas and rent out your main residence, you might still qualify for the main residence exemption for up to six years under certain conditions, which can help reduce CGT when you sell the property.
- Double Taxation Agreements: Australia has tax treaties with many countries, including the UK, to prevent double taxation. These agreements can provide relief if you are taxed on the same income in both countries.
Consulting with a tax professional who specialises in expatriate tax issues is recommended to maximise these benefits and ensure compliance with Australian tax laws.
How much is the Australia income tax for non-residents?
ATO will expect a tax return if you’re an Australian citizen with an Australian tax file number, even if you no longer earn Australian income.
Expats must pay 30% of all Australian income up to $135,000 if they’re non-residents. Any income between $135,001 and $190,000 is taxed at 37%. Income above $190,001 is taxed at 45%. Expats and non-residents don’t have a tax-free threshold.
How do I file a tax return in Australia?
Lodging tax returns in Australia is pretty straightforward, whether in Australia or overseas.
You will need a unique Tax File Number (TFN). The Australian Tax Office assigns all Aussie taxpayers a TFN and a MyGov account.
You may need to update the settings to allow you to complete your tax return from overseas. You can submit your tax return online through myTax, the fastest and easiest way to pay taxes.
According to the Australian tax rules for expats, you will require the following:
- Your bank account details
- Proof of net taxable income
- Proof of expenses and deductions
- Evidence of private health funds (if you’re required to pay the Medicare Levy Surcharge)
You can find out more on our How to Lodge your Australian Tax Return as an Expat page.
What are the property taxes for non-residents in Australia?
Different property taxes depend on whether you’re a tax resident or non-resident for tax purposes. Tax non-residents and foreign residents must pay a range of property taxes, including:
- Income Tax: Tax on rental income and other Australian-sourced income.
- Capital Gains Tax (CGT): Tax on profits from selling Australian property.
- Stamp Duty: State-based tax on property purchases, with possible surcharges for foreign buyers.
- Land Tax: Annual state-based tax on land value, with potential surcharges for non-residents.
Do I need to pay tax twice?
Australia has agreements with many countries (40 in total) to protect Australian non-residents from double taxation and prevent tax evasion.
The agreements or treaties are commonly known as double tax agreements. These affect various tax types in both countries. For example, the UK and Australia agreement focuses on different tax types to prevent double taxation and evasion in either jurisdiction.
Find out more on our Double Tax Agreement page.
What is the capital gains tax rate in Australia from the UK?
You must work out your capital gain or loss for each asset you sell during a financial year, such as property or shares. You pay taxes on your net capital gains, i.e. your capital gains, less your capital losses and discounts you are entitled to on your gains.
For example, selling a property bought for AUD 500,000 for AUD 700,000 results in a AUD 200,000 capital gain, needing net calculation after losses and discounts.
Non-residents are subject to capital gains tax only on taxable Australian property. Assets you acquired before 20 September 1985 are not subject to CGT.
You may also be eligible for the 50% CGT discount if you acquired assets after 8 May 2012. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it.
Can I claim Australian tax deductions?
As a property investor or an Australia-based property owner, there are certain tax deductions you can apply for as an Aussie expat.
There are several expenses and deductions you can claim, including deductions for:
- Rental Properties: Expenses related to managing and maintaining your rental properties.
- Furniture and Assets: Depreciation of certain furniture and assets used in rental properties.
- Utilities and Internet Connections: Costs associated with utilities and internet services for rental properties.
- Landline Costs: Landline telephone expenses for rental properties.
- Electricity Costs: Electricity expenses for rental properties.
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