Capital Gains on UK property

Hi all

I am sure this is answered elsewhere but I couldn't find a thread with the same scenario

Been living in Australia for 3.5 years. Me PR and husband Aus citizen. During that time we have rented out a UK property, which we have declared on Aus tax returns and also submitted Uk returns

We are selling the house. The price we are selling it for, is only around GBP 10k more than we initially paid for it, so if I am understanding the inland revenue capital gains calculator correctly, we will have no CGT to pay in the UK.

We have about GBP 65k equity which we will move to Aus as a deposit for a property here.

Are there any AUS tax implications to consider?

Hi all

 

I am sure this is answered elsewhere but I couldn't find a thread with the same scenario

 

Been living in Australia for 3.5 years. Me PR and husband Aus citizen. During that time we have rented out a UK property, which we have declared on Aus tax returns and also submitted Uk returns

 

We are selling the house. The price we are selling it for, is only around GBP 10k more than we initially paid for it, so if I am understanding the inland revenue capital gains calculator correctly, we will have no CGT to pay in the UK.

 

We have about GBP 65k equity which we will move to Aus as a deposit for a property here.

 

Are there any AUS tax implications to consider?

hi

The UK capital gains tax allowance is £11,000 so you should have nothing to pay here.

Thanks for the reply. I am clear that there no CGT to pay in the UK

Are you saying that because that is the case, there should be nothing to pay on it in AUS when we move the funds over - that its taxed/or not at source only? The funds being the gains (10k) and the equity (a lot more).

Thanks for the reply. I am clear that there no CGT to pay in the UK

 

Are you saying that because that is the case, there should be nothing to pay on it in AUS when we move the funds over - that its taxed/or not at source only? The funds being the gains (10k) and the equity (a lot more).

i have been told that capital gains tax is payable on any capital gain made after arrival in Australia and that capital gains made prior to that are not counted for Australian tax. I'd check it out yourself though, don't just take my word for it.

i have been told that capital gains tax is payable on any capital gain made after arrival in Australia and that capital gains made prior to that are not counted for Australian tax. I'd check it out yourself though, don't just take my word for it.

Yes that's how it works. You have to declare and pay tax on the capital gain for the period you've been Australian Tax Residents. The gain made before that is exempt from Australian tax and there's no tax on the equity (you pay income tax on income not equity). If you don't have a valuation for your property at the point you moved to Australia you can apportion the gain on a straight line basis (it's needs to be done on the exact number of days but for simplicity) if you bought the property 7 years ago and have been in Australia for 3.5 years then you'd be paying tax on 50% of the gain, discounted a further 50% because you owned the property for more than a year so 25% of the gain would be subject to tax. As there's two of you that's an extra 12.5% of the gain as income to add to each of your tax returns (based on all the assumptions above the actual figure does need to be worked out properly). The amount of tax to pay will depend upon how much other income you each have.

I believe you can deduct certain costs associated with selling the property. Much of that £10,000 could be wiped out by stamp duty (on purchase), estate agent and solicitors fees. Also take full account of any capital improvements you made on the house while owning it. You may wind up with a net loss.

Thanks everyone for the replies, think I understand now. Looks like if I do end up having to pay anything at this end it won't be significant

One final question - presumably this is something i can just sort out with the tax agent when I do my year end return? I don't need to do anything in the meantime?

Thanks everyone for the replies, think I understand now. Looks like if I do end up having to pay anything at this end it won't be significant

 

One final question - presumably this is something i can just sort out with the tax agent when I do my year end return? I don't need to do anything in the meantime?

For Australian tax you don't have to do anything until your year-end return but for UK tax as a non-resident you do need to report the sale to HMRC within 30 days of the sale (even where no tax is payable). If you don't have a UK accountant your solicitor/conveyancer should be able to sort that out for you or there's an online form: https://online.hmrc.gov.uk/shortforms/form/NRCGT_Return