CGT from Uk property- confused

[elscad]

Can anyone help? There seems to be so much conflicting information. We are in the process of selling our UK property which was our main residence from 2003-2010. Then we have rented it out-although the tenants moved out in July it will be over the 36 month period of avoiding CGT.

We have always declared this income on UK and Australian tax returns. I have dual nationality and the property is in my name only and we have not bought in Australia. I have two questions, firstly are we liable to CGT in the UK? I believe we are not in Australia due to the 6 year rule. Secondly, when the property is finally sold do I have to pay tax on the money I move into Australia? I already have a Moneycorp account.

Please help!!!!

[Andrew from Vista Financial]

Hi

 

With regards to a UK CGT liability. Maybe but maybe not.

 

Has the property increased in value since 2010? If it has you may find that any CGT or letting exemption will mitigate or eliminate any tax.

 

Advice from /discussion with HMRC and/or a UK qualified Tax Adviser detailing your situation should soon make things clear.

 

I agree with the Australian CGT comment based on the info provided.

 

Regards the tax on transferring the funds, this can be a bit of a grey area in regards to foreign exchange gains, generally though domestic monies (under certain amounts) being transferred are fine.

 

However again advice from /discussion with the ATO and/or an Australian qualified Tax Adviser detailing your situation should clarify matters.

 

Hope this helps.

 

Regards Andy

 

 

Please note that this is general information only.

[Notts]

Has the property increased in value since 2010? If it has you may find that any CGT or letting exemption will mitigate or eliminate any tax.

 

 

It doesn't work quite like that - you have to start by looking at the whole gain over the period of ownership, and then apportion it based on time, not the gains in particular parts of your total ownership.

 

For example suppose you had a total gain of £50,000 and property was owned for a total of ten years. It was your main residence for the first five years. With no other property, five years worth of gain (£25,000) would be covered by the Private Residence Relief, plus you get the first three years after you move out covered too (a further £15,000). Your potential taxable gain has become £10,000. Next you will consider Letting Relief, which is limited to the lower of: £40,000 (fixed in law), the amount of Private Residence Relief (£25,000 in this example) or the gain in respect of the period it was let (the remaining £10,000).

 

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

 

Having said all of that, if you are not UK resident for tax purposes then you are not generally liable for UK CGT at the moment - paragraph 6.60 http://www.hmrc.gov.uk/cnr/rdr1.pdf#page44. This will change in April 2015.

[winter1]

Suggest this link and look for absences from your home

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#2

I found ringing HMRC was useful and I disposed of my home after 11 years and as I was overseas for over 5 years no UK tax was due.

I did have to pay CGT in Australia but as the dollar had risen to 64p it was 38p when I arrived in Oz the gain was minimal as the dollar value had only risen by a few thousand dollars and then only liable for 50% of the gain.

The UK Government has announced today that any gains "from" April 2015 expats will be taxed in the UK but they still have to work out the details. If you are absent from your main UK residence for up to 3 years then it will also be disregarded.

 

The phone number for HMRC non residents is

"If you're calling from abroad please telephone:+44 135 535 9022"

[Rupert]

It doesn't work quite like that - you have to start by looking at the whole gain over the period of ownership, and then apportion it based on time, not the gains in particular parts of your total ownership.

 

For example suppose you had a total gain of £50,000 and property was owned for a total of ten years. It was your main residence for the first five years. With no other property, five years worth of gain (£25,000) would be covered by the Private Residence Relief, plus you get the first three years after you move out covered too (a further £15,000). Your potential taxable gain has become £10,000. Next you will consider Letting Relief, which is limited to the lower of: £40,000 (fixed in law), the amount of Private Residence Relief (£25,000 in this example) or the gain in respect of the period it was let (the remaining £10,000).

 

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

 

Having said all of that, if you are not UK resident for tax purposes then you are not generally liable for UK CGT at the moment - paragraph 6.60 http://www.hmrc.gov.uk/cnr/rdr1.pdf#page44. This will change in April 2015.

 

Good explanation on the UK side. Possible Andrew from vista was talking about the Australian side though.

[Alan Collett]

Subject to the proposals from the UK Government effective April 2015 this isn't a UK tax issue, assuming you are no longer resident in the UK.

 

It is an Australian CGT issue, and you may be able to make use of the 6 year letting exemption in respect of a former main residence.

 

See here for more info: http://www.ato.gov.au/General/Capital-gains-tax/In-detail/Real-estate/Treating-a-dwelling-as-your-main-residence-after-you-move-out/

 

And in case of need: http://www.gmtax.com.au/contact/

 

Best regards.

[elscad]

Thank you to everyone for your advice-sounds very promising. We've had a lot of problems selling our property so an easy end would be preferable. Any idea how much a tax agent would cost and what that actually includes?