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lisalooby1971

CGT for UK House sell 6.5 Years after leaving UK

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Hi there

 

We have just sold our UK property 6.5 years after leaving the UK of which it was rented out for that time. This property has always been our main residence as we have only rented in Australia.

 

Does anyone have any idea if we will pay capital gains tax on the whole 6.5 years or just the six months we have gone over, and also is the tax based on the original purchase price or the market value of the property from the time it was rented out until we sold.

 

We are going to see an accountant, but if anyone has any ideas or has done this any advice would be greatly received.

 

Thanks. Lisa

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Hi Lisa, welcome to the forum, we have a few members who should be able to advise but one who springs to mind is @Alan Collett


If you are depressed you are living in the past. If you are anxious you are living in the future. If you are at peace you are living in the present.

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Hi Lisa, welcome to the forum, we have a few members who should be able to advise but one who springs to mind is @Alan Collett

 

Many thanks for the mention!

 

@lisalooby1971 Please feel able to send a PM to me to explore this question more fully (click on my name to the left of this post).

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Hi there

 

We have just sold our UK property 6.5 years after leaving the UK of which it was rented out for that time. This property has always been our main residence as we have only rented in Australia.

 

Does anyone have any idea if we will pay capital gains tax on the whole 6.5 years or just the six months we have gone over, and also is the tax based on the original purchase price or the market value of the property from the time it was rented out until we sold.

 

We are going to see an accountant, but if anyone has any ideas or has done this any advice would be greatly received.

 

Thanks. Lisa

 

Lisa

 

Any CGT would be based on the value from when you no longer used it as your main residence ( not from when you bought it). In the UK you do get indexation relief (used to be called taper relief) which effectively looks to remove inflation from any CGT calculation.

 

I would definitely seek advice - but hopefully the above puts your mind at ease... I do wonder whether you may have to pay some CGT to the Australian tax office (they do love a good cash grab)... If you are a permanent resident of Oz, then I think you would pay CGT charge in Oz, albeit any tax you have paid in the UK would be deducted. I.E. you would pay the higher of the CGT rates in either UK or Aus, but not both.... The UK and Aus schemes are a bit different, so definitely seek advice from a tax Accountant on ways to MINIMISE any CGT charge..... You may need two accountants - one for UK and one for Oz....


(ANSCO 221112 MANAGEMENT ACCOUNTANT); CPA Skills Assessment submitted 10th May - Positive Skills assessment 19/05/2015 - CPA Australia; Pearson PTE Academic (10/07/15 R90; W89; S90; L90); EOI updated 11/07/2015 (70 points); Invitation received 03/08/2015; Visa lodged 04/08/2015; docs all front loaded... Visa grant 23 September 2015 :wink:

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Lisa

 

Any CGT would be based on the value from when you no longer used it as your main residence ( not from when you bought it). In the UK you do get indexation relief (used to be called taper relief) which effectively looks to remove inflation from any CGT calculation.

 

I would definitely seek advice - but hopefully the above puts your mind at ease... I do wonder whether you may have to pay some CGT to the Australian tax office (they do love a good cash grab)... If you are a permanent resident of Oz, then I think you would pay CGT charge in Oz, albeit any tax you have paid in the UK would be deducted. I.E. you would pay the higher of the CGT rates in either UK or Aus, but not both.... The UK and Aus schemes are a bit different, so definitely seek advice from a tax Accountant on ways to MINIMISE any CGT charge..... You may need two accountants - one for UK and one for Oz....

 

 

Pommie

 

Lisa is almost certainly no longer tax resident in the UK - so the comments in your email about CGT in the UK are unlikely to be correct.

 

Rather, the UK has introduced a CGT charge from the 6th of April, 2015 on the disposal of residential property in the UK by non UK resident individuals, measured (usually) with regard to the value of the property on the date the charge was introduced.

 

There is also likely to be CGT payable in Australia, given the property has been owned for more than 6 years.

 

Finally, there is no need to instruct two accountants - so long as you choose an accountant who is qualified in both countries ...

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Thanks for your replies. Glad to hear it is the value of the property when we left as this was the same as when we sold this year, due to the recession between 2008 and 2015. We would have actually been better off if we had sold at the time because the exchange rate was also 2.3 to a pound rather than the 1.94 it was when we sold. Hoping this will mean we will have no CGT to pay after the deduction of other losses also. It is a worry though as you always think they will get your money some how.

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Well they can't tax a gain you have not made. On the other hand did you declare the rental income?


So many wineries ......so little time :yes:

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Well they can't tax a gain you have not made. On the other hand did you declare the rental income?

 

Yes always included our rental in the tax return, we have never made a profit from it. We would have made a gain in capital if it was based on the price we purchased the property back in 2002, so hopefully it is the market value in 2008 it will be based on

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Hey folks,

 

Sorry, but I still haven't quite got my head round this, and I need to as I'm in the same boat as Lisa. Just to spell it out for this thicko (me)... let's say this is a simple case where the property was the vendor's main UK residence until emigration and it has been let or available for let from then until the sale. Are we saying the taxable gain is essentially (sale proceeds - valuation as at April 6,2015), or (sale proceeds - valuation when leaving the UK), or something else? I get that other factors come into play (e.g. relief to reduce the taxable amount), but I'd like to at least understand the absolute basics of the calc.

 

I've been trying to work through the example at [TABLE=width: 75]

[TR]

[TD=width: 75]https://www.gov.uk/capital-gains-tax-for-non-residents-uk-residential-property[/TD]

[/TR]

[/TABLE]

and it has confused the heck out of me.

 

As an aside: Alan, would you be one of the people you mentioned (an accountant able to handle the UK and Aussie side of things in this situation)?

 

TIA

Nick


ACS RPL submitted 13/03/09 ¦ RPL approved 2231-79 (Oracle) 12/05/09 ¦ 175 visa application lodged 21/05/09 ¦ IELTS 9-9-9-9 13/06/09 ¦ Case officer assigned 20/10/09 ¦ Medicals done 27/10/09 ¦ Police certs sent 10/11/09 ¦ Visa granted 24/11/09

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What happens if you bought in, say, 2007, then moved to Aus in 2011 on a 457, then got PR later - but didn't have the house valued upon moving to Aus cos we didn't know we should have?!


She'll be right!

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Hello again

 

We went to the taxman and all was ok. It is worked out on the market value of the house when you leave the uk not what you paid for it. As the house prices are slightly less now than what we would have got for it in 2008 plus the difference in exchange rate we actually made a huge loss.

 

We asked the estate agent who sold our house recently and he sent through a list of sales in the area and confirmed that this was the case.

 

The taxman just said that if we ever got audited we would have to get proof of the market value at the time by getting a surveyor to state this but the chances of getting audited is highly unlikely.

 

Had we had made a gain, I think the CGT would have been 11% of half the profit we made between renting out and selling.

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Ah cool! I think the value will have increased since we moved in 2011, but think we are exempt as we are well within 6 years since renting out, and haven't bought in Aus yet!


She'll be right!

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We went to the taxman and all was ok. It is worked out on the market value of the house when you leave the uk not what you paid for it. As the house prices are slightly less now than what we would have got for it in 2008 plus the difference in exchange rate we actually made a huge loss...

 

Thanks Lisa. Was this the UK and/or Aussie taxman? Did you check with both?


ACS RPL submitted 13/03/09 ¦ RPL approved 2231-79 (Oracle) 12/05/09 ¦ 175 visa application lodged 21/05/09 ¦ IELTS 9-9-9-9 13/06/09 ¦ Case officer assigned 20/10/09 ¦ Medicals done 27/10/09 ¦ Police certs sent 10/11/09 ¦ Visa granted 24/11/09

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Hey folks,

 

Sorry, but I still haven't quite got my head round this, and I need to as I'm in the same boat as Lisa. Just to spell it out for this thicko (me)... let's say this is a simple case where the property was the vendor's main UK residence until emigration and it has been let or available for let from then until the sale. Are we saying the taxable gain is essentially (sale proceeds - valuation as at April 6,2015), or (sale proceeds - valuation when leaving the UK), or something else? I get that other factors come into play (e.g. relief to reduce the taxable amount), but I'd like to at least understand the absolute basics of the calc.

 

I've been trying to work through the example at [TABLE=width: 75]

[TR]

[TD=width: 75]https://www.gov.uk/capital-gains-tax-for-non-residents-uk-residential-property[/TD]

[/TR]

[/TABLE]

and it has confused the heck out of me.

 

As an aside: Alan, would you be one of the people you mentioned (an accountant able to handle the UK and Aussie side of things in this situation)?

 

TIA

Nick

 

 

Hi Nick.

 

Yes, I am.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Hello again

 

We went to the taxman and all was ok. It is worked out on the market value of the house when you leave the uk not what you paid for it. As the house prices are slightly less now than what we would have got for it in 2008 plus the difference in exchange rate we actually made a huge loss.

 

We asked the estate agent who sold our house recently and he sent through a list of sales in the area and confirmed that this was the case.

 

The taxman just said that if we ever got audited we would have to get proof of the market value at the time by getting a surveyor to state this but the chances of getting audited is highly unlikely.

 

Had we had made a gain, I think the CGT would have been 11% of half the profit we made between renting out and selling.

 

 

Did the tax man also talk about the forex gains and losses provisions?

 

Did you get a private binding ruling from the ATO?

 

I'm afraid that a verbal comment from the tax office isn't worth a great deal. It certainly can't be relied upon in the event of an enquiry.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Those who are (or have been) renting out their property in the UK - have you been claiming depreciation on the fittings, etc in your let property on your Australian tax returns?

 

If not, consider getting a tax depreciation report prepared - you can usually revisit tax returns for several years - to generate tax repayments.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Hi Nick.

 

Yes, I am.

 

Best regards.

 

Thanks Alan. I'll have one last attempt at getting my head round all of this unaided, but I suspect I might be calling on your services soon :)


ACS RPL submitted 13/03/09 ¦ RPL approved 2231-79 (Oracle) 12/05/09 ¦ 175 visa application lodged 21/05/09 ¦ IELTS 9-9-9-9 13/06/09 ¦ Case officer assigned 20/10/09 ¦ Medicals done 27/10/09 ¦ Police certs sent 10/11/09 ¦ Visa granted 24/11/09

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