Jump to content

You're currently viewing the forum as a Guest
register-now-button_orig.png
and join in with discussions   
ask migration questions
message other members

..and much much more!

Onmywayhome

Will I have to pay Australian capital gains tax if I eventually sell my UK flat?

Recommended Posts

Hi All

 

I'm moving to Australia soon and renting out my flat here. As I understand it, there will be no UK CGT payable if I sell it within 3 years. But I'm wondering, since I'll be an Australian resident at that point, will I have to pay Australian CGT on it?

 

Any advice would be much appreciated!

Share this post


Link to post
Share on other sites

Yes, if you are a permanent resident

 

Not if you are on a temporary visa

 

Remember though that CGT only applies to capital gains - so you only get taxed on the increase in value since you became a permanent tax resident. In the current market that is unlikely to be much of an issue, but be aware that Forex gains count as well. So if your flat is worth 200K GBP (and therefore currently about $310K), and the exchange rate miraculously goes to 2:1 and your flat is now worth $400K, you have a tax liability on that $90K gain even if the UK selling price doesn't shift at all. Sucks but there you go. Get a valuation of your UK property and make sure it's a generous one, so you have something in writing

Share this post


Link to post
Share on other sites

Yes it will apply. You need to have a valuation of the property at the time you come to Australia this will be the value on the day you arrive this will be the cost base for Australian CGT you need to convert the figure to Australian Dollars at the rate on that day.

I believe if you sell within a year you will have to pay CGT based on 100% of the profit that you make.

Although you may also be able to claim the 6 year exemption. This is if the property was your main residence then you have 6 years in which you can let it out without incurring CGT.

Be aware that if the Australian Dollar goes down the profit will increase even if the amount in Pounds you receive remains the same as you have to calculate the exchange rate on the day you sell.

If you sell it after a year you will get a 50% reduction in CGT.

Also the figure is added to your annual income therefore if you earnings are taxed at the 30% rate this will be taxed at this rate or your highest Marginal rate.

 

If the dollar goes up the profit figure will be reduced also if the property is in joint names then the gain will be split between both parties and if one is not earning then the CGT will not be a worry for that %.

If you leave Australia you will also be liable to pay even if you haven't sold it.

 

Best advice is to get advice from a professional but many "Tax Accountants" that people use here are just as much in the dark unless they have had previous experience of this. You also stand a better chance in a Capital City than a regional area.


:confused:

Share this post


Link to post
Share on other sites
Guest RichB

Why are your answers saying this person will be liable for CGT?...If you dont know the facts on this why are you giving answers to it?..Just because she has a falt that is rented out she is not automatically liable for this one extra rip off in Australia...If the property is or was your primary place of residence you will not be liable for this extortion....my advice wold be to not divulge too much info to them, as the more you are up front the more they want to sponge out of you.

Share this post


Link to post
Share on other sites

Thanks for the helpful answers - I was hoping the answer would be a simple "no", but I should've known it'd be more complicated!

 

I'm an Australian citizen returning home, so no chance of any exemption for being a temporary resident. The flat was my main home, so I'll look into what effect that has. But I think Winter1 you're right and I should get some professional advice, and perhaps a valuation before I leave. Just more things to add to the ever-growing pre-departure "to do" list (sigh).

Share this post


Link to post
Share on other sites

Good luck with the move back, but as I indicated if the flat was your Main residence you may be able to claim the 6 year exemption.

I know this applies to your Main residence in Oz if you don't purchase another property and claim that as your main residence.

A professional will be able to help but make sure you get one who is familiar with this, I have rung the ATO on different days and received different answers to the same question from different people.


:confused:

Share this post


Link to post
Share on other sites
Good luck with the move back, but as I indicated if the flat was your Main residence you may be able to claim the 6 year exemption.

I know this applies to your Main residence in Oz if you don't purchase another property and claim that as your main residence.

A professional will be able to help but make sure you get one who is familiar with this, I have rung the ATO on different days and received different answers to the same question from different people.

 

 

If they don't buy in Australia, then I believe it is exempt (6 years does not come into it).

 

If they do buy in Australia, then they may continue to consider the UK property as main residence for 6 years whilst renting it out and indefinitely if not renting it out (and it is empty / for their own use). This would mean of course that the Australian property could not be considered a main residence for the same period.

Edited by Rupert

Share this post


Link to post
Share on other sites

Hi,

 

Interested in this thread i came across from some time ago.

 

Does anyone know if RichB comment on the 22-04-2012, 10:23 AM is accurate ?

 

Im in a similar position regarding ctg.

 

Feb 2005 - 2008 457 visa

Feb 2008 PR

 

If have a uk house that i bought in 2003 and lived in until i left in feb 2005, when i rented it out.

 

I've never bought in Oz and always rented, so my uk house is my perm place of residence ?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×