(I hope anyone doesn’t mind me posting this query again, as the first time I posted from a new account last month, reddit auto deleted my post. Whilst the mods were helpful in putting it back up, my post had already been pushed off the front page. So I’m going to try asking again).
I am currently an NPR on a Dependent visa, with income from a UK property (which I used to live in before coming to Japan) that is not remitted to Japan (and hence not declared). However for tax year 2025 onwards, I will become a permanent resident for tax, which means that I will have to declare my UK property income whether I remit it or not. I already do Self Assessment in the UK, but the taxable income (rent less deductible expenses) is less than the personal allowance, so no tax to pay on the UK side. The property used to be my main residence, and I only rented it out when I moved to Japan in early 2020.
To ensure I am reporting the correct amounts to the NTA, I am proposing doing the following. If someone could advise me whether they are reasonable steps, I would greatly appreciate it:
1. I receive a statement once a month from my estate agent with rental income, less deductions. The net amount is paid to my UK account on the statement date For FX purposes, can I use the mid-market FX rate at the statement date to calculate the income and deductible expenses amounts in yen?
2. Can I include depreciation of the property as an expense (including depreciation in this case would not result in a loss)? Assuming I use some method to split the land/building cost at acquisition and then calculate depreciation on the building using a straight line basis (say, 4,000 GBP a year, 38 year life span of the building), how should I value this in yen? Divide it by 12 and use the same mid-market rates as I use with my monthly statements (see 1)? The problem with this approach is that the depreciation expense will vary each month due to currency fluctuations and not be ‘straight line’, so would I have to split this into depreciation (converted to yen at the date of the property purchase, so in yen value it would be straight line) and FX gain/loss?
3. If I transfer the rental income monthly from my UK account (GBP) to my Japanese account (Yen) using Wise a couple of days after the amount from my estate agent has been received, do I need to record the FX Gain/Loss from the change in value of the currency? Or should I omit this as the amounts involved are likely to be very small over the course of a year.
Finally, I know that I will likely have to file a Statement of Overseas Assets for tax year 2025 onwards, as the market value of the property alone is close to the 50mil threshold. I think I have to include my UK bank account, and the market value of my property on this statement, but I am unsure whether I need to include my Defined Contribution pension account (from my old UK job). The value of this account varies every year depending on investment performance, but I can’t touch the account until I hit retirement age, or make further contributions into it. Do I have to include it? And would I have to report FX gains/losses on my tax return for this?
Thank you to everyone in advance.
by Firefly2501
