You tax payers are gonna hate me for

[Time to raise the rents.]

I've been dutifully following the rules to stay a UK resident for a while now, whilst my wife became a Swedish resident a while back.

I've now changed over to be a Swedish resident, fully expecting my tax burden to be higher than my overall 22% in the UK (as it was a good year). I fully expected it to rise to 30% because Sweden has certain rules that the UK doesn't on capital income and they're considered a higher tax burdened country. I was fully prepared to pay 30% as I felt it was my duty to Sweden.

Anyway, on a visit to the local tax office last week, I was shocked and actually began my mental planning for a swift move away from Sweden. Because my case is so unique to the local tax office (this is a town of 16,000 & district of 32,000 peopl), they told me that my tax burden would be firstly 33% local tax (not the capital tax I expected), then another 24% national insurance, 57% altogether they said!

But Don't worry they said, I'll get the national insurance back when I have a Swedish pension when I retire 31 years from now!

Did they realise I would be moving to Australia & wouldn't be eligible for the Swedish pension (maybe I would, but who knows)?

This was shocking and very emotional (I was angry). How would we pay both our normal expenses and be able to save enough money to cover times of high IR's or possible voids in the future? Moving seemed to be the only option

But don't worry, on checking further (calls to larger tax offices), we have since found out that my tax burden will actually be lower than in the UK now. Sweden allows me to write down the opening cost of the properties over 50 years 2% a year, which after taking all other allowances into account, means the income I declare in Sweden will be less than in England. Also, the 24% Nat Ins is not applicable to passive income from overseas!

We got official confirmation of all of this today and guess what! My tax burden will now be about 16% of my overall income, that's the tax the UK will charge me. If it wasn't for the UK, it would be less than 5%.

Can you believe it? This is in a country where the average self employed person pays the 57% I spoke of (my father in law pays it now).

[zzg113]

Crap being a Swedish citizen isn't it. How can your wife 'become' a Swedish resident? I though she was Swedish anyway.

[Time to raise the rents.]

Crap being a Swedish citizen isn't it. How can your wife 'become' a Swedish resident? I though she was Swedish anyway.

<{POST_SNAPBACK}>

Residency is different from citizenship, she was a UK resident before moving back to Sweden and reclaiming residency.

[fdk]

Presumably if they give a tax deduction for the capital cost of investment properties against rental income, then when an investor sells they tax the full sales proceeds as a capital gain with no tax deduction for the cost ?

[Randall Herbert]

Residency is different from citizenship, she was a UK resident before moving back to Sweden and reclaiming residency.

<{POST_SNAPBACK}>

Hmmm, slipped up there TTRTR....... I smell more than a wiff of a porkpie regarding your so called existance in Sweden. One or two other slip ups over the past few weeks. Perhaps you could post a picture of yourself today at a Swedish landmark with a copy of the local Blad in shot?

Don't suppose you and BBB are one and the same perhaps?

[Time to raise the rents.]

Presumably if they give a tax deduction for the capital cost of investment properties against rental income, then when an investor sells they tax the full sales proceeds as a capital gain with no tax deduction for the cost ?

<{POST_SNAPBACK}>

Actually that is a very good question since if I depreciate a car, then sell it later at more than the depreciated value, I have to pay tax of the difference.

3 answers:

1/ I don't know, but will find out.

2/ Who cares anyway, I'll be selling from New Zealand.

3/ My much lower tax burden will help me to be able to pay them off rather than sell them if necessary.

It's a good question though!

[Time to raise the rents.]

Hmmm, slipped up there TTRTR....... I smell more than a wiff of a porkpie regarding your so called existance in Sweden. One or two other slip ups over the past few weeks. Perhaps you could post a picture of yourself today at a Swedish landmark with a copy of the local Blad in shot?

Don't suppose you and BBB are one and the same perhaps?

<{POST_SNAPBACK}>

Don't get it? Citizenship is by birthright. Residency is where you are taxed & where you tend to live.

I am a citizen of Australia, I am a resident of Sweden. They're two different things.

There's my house in the Avatar.

Please exlain better if you feel there's a question to be answered here.

[OnlyMe]

TTRTR,

What will your tax bills look like if you lose over 50% of your current captial (in real terms) over the next decade?

[Time to raise the rents.]

TTRTR,

What will your tax bills look like if you lose over 50% of your current captial (in real terms) over the next decade?

<{POST_SNAPBACK}>

Do you write for a newspaper? That prediction is up there with what they'd say.

If it were a serious question, I'd reply:

Who cares, I'll have saved so much tax that I'll pay them down faster than you realise!

[rockdoctor]

TTRTR; What does the UK Inland Revenue class your domicile as?

I was amazed to discover that you can have nationality, residency and domicile all different, but be taxed on the basis of your domicile.

I'm British everything, but my wife is German, with British residency. However, the IR class her as German-domiciled until she has lived in the UK for 15 tax-years, until which time we get only a few of the normal financial benefits of being married.

For example I can't transfer assets to her tax-free.

Are you Australian-domiciled for tax purposes?

[Time to raise the rents.]

I probably am, but TBH it wouldn't change anything as far as I know, mainly because the income is UK based.

[Bubble Pricker]

This has worked out well for you TTRTR, albeit by chance not by design.

There is a whole business line for lawyers and tax advisers for international tax planning for private high net worth clients. The tax that can be saved by careful international tax planning if you are seriously loaded is enormous. I know people who constantly fly to Luxembourg in their private jet to hold company meetings there, so as to comply with residency requirements, and despite all this expense, they are saving many times that in taxes.

[OnlyMe]

TTRTR,

It was a serious question, although I omitted currency losses of say about 20% on top.

[Time to raise the rents.]

TTRTR,

It was a serious question, although I omitted currency losses of say about 20% on top.

<{POST_SNAPBACK}>

We'll see, but currency losses wouldn't apply (it'd only be in my imagination) anyway, because my mortgages and property are all in GBP, except the house in Sweden which is already paid for of course.

[fdk]

Actually that is a very good question since if I depreciate a car, then sell it later at more than the depreciated value, I have to pay tax of the difference.

3 answers:

1/ I don't know, but will find out.

2/ Who cares anyway, I'll be selling from New Zealand.

3/ My much lower tax burden will help me to be able to pay them off rather than sell them if necessary.

It's a good question though!

<{POST_SNAPBACK}>

Also, just because you leave Sweden doesn't mean you'll escape a balloon tax charge on departure.

If the Swedish tax office people know of your intention to leave, thereby denying them the posibility of taxing your investment property sale proceeds, they may 'claw back' the benefits already given to you on the basis of your Swedish 'residency'.

I would be very surprised if you were given tax deductions on the cost of investment properties for nothing. Tax authorities just aren't that generous I'm afraid.

Looks like it might be tim eto hire a local tax accountant !!

[OnlyMe]

If I had investments/pension in a foreign currency I'd be very interested in currency effects. Whatever suits you best though I suppose.

[Time to raise the rents.]

This has worked out well for you TTRTR, albeit by chance not by design. 

There is a whole business line for lawyers and tax advisers for international tax planning for private high net worth clients.  The tax that can be saved by careful international tax planning if you are seriously loaded is enormous.  I know people who constantly fly to Luxembourg in their private jet to hold company meetings there, so as to comply with residency requirements, and despite all this expense, they are saving many times that in taxes.

<{POST_SNAPBACK}>

You're right that it's by chance and not design, but I was fully willing to pay my fair share like I always have as an employee.

This could lead me onto a whole new thread though. Don't always be fooled by these scummy self proclaiming tax experts.

4 years ago I paid a highly qualified Swedish tax advisor in London £400 to advise me on my move to Sweden.

To cut it as short as possible, he told me many things that were wrong and he used it as a sales meeting to try to get me involved in some offshore shares scheme where I'd put everything in trust for years & sign control over to other people in Switzerland etc etc.

He told me I'd save tax in Sweden. Sweden has a wealth tax of 1.5% of a persons wealth for people who have more than £80K (it's been upped to £200K now, but was £80k then) which was what worried me the most.

If I'd have sold up, paid CGT & handed our assets over to his trust and invested in shares, I would be 25% (financially) of the man I am today! And that's if he didn't steal it from me as well.

What the man should have told me for my £400 was that the wealth tax doesn't apply to assets held for income production and business purposes, it only applies to private assets. I have learned that here myself & half the Swedes didn't even know.

He should have also told me that as I've now learned, my tax burden would actually be less here.

But the fact is, £400 wasn't enough for him. He wanted more and he wanted to get it from me legally with a wink & a handshake.

Be careful people, they're everywhere.

[Time to raise the rents.]

If I had investments/pension in a foreign currency I'd be very interested in currency effects. Whatever suits you best though I suppose.

<{POST_SNAPBACK}>

When we first bought our house in Sweden I tried to hedge it against sterling. I lost £11,000 over 2 years. If I'd have held on 2 more years, I'd be back to a £2,000 loss, but as I said to Sledgehead, as people we tend to make the wrong decision when things go against us and be afraid to rejoin even if we think it might go the right way.

Anyway, sterling is a strong currency. If it weakens, property should do very well from foreign investors and the mortgages will drop in significance!

[zzg113]

How did you hedge it TTRTR? Forwards?

[OnlyMe]

TTRTR,

Good man, at least you are aware of the currency issue and have tried (even though unsucessfully in the past) to hedge your risk.

Anyway, sterling is a strong currency. If it weakens, property should do very well from foreign investors and the mortgages will drop in significance!

What is sterling backed by? Oil?, Commodities? Productive capacity? Or, err high house prices?

If the £ falls your mortgage will only drop in relation to your local earnings, as will any income derived in £. Do you intend to sink money into paying the mortgages off with local earnings then?

[Marketeer]

Ignore them, TTRTR my man. They have no properties. They are poor and do not understnad what it means to be wealthy. Proprty is going up in th espring, Kirsty says so and you would be a complete idiot to argue with her.

Ignore their jealousies. I have a cabin in Sweden too, alythough mine is bigger than yours. Having said tyhat, youyrs looks nice.

Its going up, and dodging tax like you suggest is the best way to get more cash in your hands so you can take more properties away from the low life renter scum.

MKTR

[zzg113]

****** off back to singing pig you fat ugly *******.

[zzg113]

DO NOT FEED THE TROLL.

[Marketeer]

He's right. The first time this rentoid has said anything even half correct.

Pay attention everyone and dont feed the troll.

And leave the 'pig out of this. You know not of what you speak.

[Time to raise the rents.]

TTRTR,

Good man, at least you are aware of the currency issue and have tried (even though unsucessfully in the past) to hedge your risk.

Anyway, sterling is a strong currency. If it weakens, property should do very well from foreign investors and the mortgages will drop in significance!

What is sterling backed by? Oil?, Commodities? Productive capacity? Or, err high house prices?

If the £ falls your mortgage will only drop in relation to your local earnings, as will any income derived in £. Do you intend to sink money into paying the mortgages off with local earnings then?

<{POST_SNAPBACK}>

The UK is backed by the City and it's world status.