Guest spock Posted May 14, 2008 Share Posted May 14, 2008 I think I read something in the dim and distant past, but I can't find it - can anyone help? Since the exchange rates are so bad, I'm considering renting out my house and selling later, or selling and then keeping the funds in the bank for a couple of months. OK. What is the Australian position on capital gains tax concerning this? I don't believe I would be taxed on it if I took it over with me (at about the same time), but what about if I change it a few months down the line. Will it suddenly be considered capital gains? Anybody know? Thanks, James. Link to comment Share on other sites More sharing options...
Guest Guest9973 Posted May 14, 2008 Share Posted May 14, 2008 I'm not a financial expert....... I'd go for selling the house - the UK market looks bad at the moment so perhaps best to get it on now. I'm really not sure about the CGT though - as it would be proceeds of your primary residense it should not be taxed.But one you let it out it will be an income bearing asset and may attract CGT?? We sold an investment property in the UK earlier this year.Funds still sat in the UK awaiting a hopeful increase in the exchange rates. As we have been residents here for over 5 years - no CGT to pay in the UK.Any gain on the property since our arrival is to be paid to the Oz taxman. Link to comment Share on other sites More sharing options...
Guest spock Posted May 15, 2008 Share Posted May 15, 2008 Thanks Tyke, that sounds reasonable. I'm renting to a friend who will only be charged enough to cover the costs, so no profit at all. Will I still be taxed on that money? I realise you're not an expert but you do have some experience in the matter obviously. Cheers, James. Link to comment Share on other sites More sharing options...
Guest spock Posted May 15, 2008 Share Posted May 15, 2008 And he's only renting it until it sells, then he'll find somewhere else. Link to comment Share on other sites More sharing options...
Guest TheBrowningFamily Posted May 15, 2008 Share Posted May 15, 2008 I would be very careful when deciding on this! We settled on our UK house in November 2007, the exchange rate was about 2.37, we did not really know about exchanging money etc, and thought it safer to leave in the UK until needed in Oz. Web looked into changing some of it in Dec, when the exchange rate was 2.32, but stupidly (we realise now!) we listened to people who tipped it to go up at the end of January, as we all now know that was a big mistake. We now have to exchange the bulk of our money to settle on land here, and whilst we have (still) been waiting for it to go up it has gone down further, we have 'lost' about $55,000. I don't think it will go up again, just keep falling!! Link to comment Share on other sites More sharing options...
Guest TheBrowningFamily Posted May 15, 2008 Share Posted May 15, 2008 Should be 'we looked into' not web looked into! Link to comment Share on other sites More sharing options...
Jo&Rich Posted May 15, 2008 Share Posted May 15, 2008 We did that too! Going to exchange at $2.37, but didn't, and now thinking maybe we should take $2.09! Can't wait forever... Jo Link to comment Share on other sites More sharing options...
koalakids Posted May 15, 2008 Share Posted May 15, 2008 "Ditto". We did the same as well and I think there are many more out there in the exact same boat! I try not to torture myself or 'beat myself up' over it but it is damn annoying. It caught a lot of people out including the 'FX specialists' who make their living out of it! I suppose we were stubborn in believing that we wouldn't change at a low rate with it having been 2.37 in November. We just didn't think it would keep slipping and slipping the way it has done. Have a look at this informative thread from Richard in HiFx. It gives you an up-to date view on the current situation if nothing else. http://www.pomsinoz.com/forum/money-finance/35053-april-update-aussie-dollar.html In the meantime if anyone out there knows of someone who has either a Time Machine or a Crystal Ball, I'd be very interested. Or.....even a Delorean like the one from 'Back To The Future' would be useful. Here's hoping......."wait, was that a flying pig I just saw out of my window!? :-P Steve. Link to comment Share on other sites More sharing options...
Guest Guest9973 Posted May 15, 2008 Share Posted May 15, 2008 Thanks Tyke, that sounds reasonable. I'm renting to a friend who will only be charged enough to cover the costs, so no profit at all. Will I still be taxed on that money? I realise you're not an expert but you do have some experience in the matter obviously. Cheers, James. If you are not making a profit then you won't pay tax. As to whether or not you have to declare this is another matter. I'd just keep some paper record. Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 15, 2008 Share Posted May 15, 2008 If you are not making a profit then you won't pay tax. As to whether or not you have to declare this is another matter. I'd just keep some paper record. You have to declare it and you should declare it as it will potentially reduce your Austrlaian tax, if you are paying mortgage interest on the UK property. Link to comment Share on other sites More sharing options...
Guest spock Posted May 16, 2008 Share Posted May 16, 2008 Thanks for your help everyone. Isn't it the case that the poor exchange rate is to do with Britain's economic troubles, including the housing market, and when that picks up the rate will improve again? Link to comment Share on other sites More sharing options...
Guest datum1m Posted May 16, 2008 Share Posted May 16, 2008 Hi My understanding on capital gains tax is you need to declare all your assets within the first six months of living in Australia on a full time basis, after this first six months anything you bring into the country is classed as income and is taxable. If you travel over on a trip just to get your families visa stamped and then return to the UK this would not trigger the start of your six month period, it only starts when you are living in Australia and paying their taxes. Regards Nigel Link to comment Share on other sites More sharing options...
koalakids Posted May 16, 2008 Share Posted May 16, 2008 Thanks for your help everyone. Isn't it the case that the poor exchange rate is to do with Britain's economic troubles, including the housing market, and when that picks up the rate will improve again? The sad fact is and it's bad timing for anyone exchanging money at the moment is that not only is our economy in a dip (understatment of the year) and our property market is in turmoil. But to make things extra difficult is the fact that the Australian economy is absolutely booming and is at an 11 year high! Ironically emigration is one factor that is helping the Oz economy but another is the fact that Oz is very rich in minerals and other commodities that a developing China is buying from them. There is however light at the end of the tunnel (I'm ever the optimist) as surely the Oz boom can't continue forever as we all know how that story could end!? Sit tight if you can and ride this one out for a wee bit longer me thinks. Steve. Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 16, 2008 Share Posted May 16, 2008 Hi My understanding on capital gains tax is you need to declare all your assets within the first six months of living in Australia on a full time basis, after this first six months anything you bring into the country is classed as income and is taxable. If you travel over on a trip just to get your families visa stamped and then return to the UK this would not trigger the start of your six month period, it only starts when you are living in Australia and paying their taxes. Regards Nigel Hi Nigel, this is completely untrue. I would recommend speaking to a tax adviser if you are new to Australia as you may potentially have serious issues, if this is how you are looking at things. Cheers, Andrew Link to comment Share on other sites More sharing options...
Guest hazel and dave Posted May 16, 2008 Share Posted May 16, 2008 Thanks Tyke, that sounds reasonable. I'm renting to a friend who will only be charged enough to cover the costs, so no profit at all. Will I still be taxed on that money? I realise you're not an expert but you do have some experience in the matter obviously. Cheers, James. Hi, As a UK citizen you still get your tax allowance so, if no profit... no tax. You just have to fill in a form before you go and one each financial year. We are in the same situation and I phoned iup the tax office who, surprisingly, were really helpful and knowledgeable. Good luck Link to comment Share on other sites More sharing options...
Guest datum1m Posted May 16, 2008 Share Posted May 16, 2008 Hi Nigel, this is completely untrue. I would recommend speaking to a tax adviser if you are new to Australia as you may potentially have serious issues, if this is how you are looking at things. Cheers, Andrew Hi Andrew, I would be interested to know which part of my message you feel is untrue, I am passing on information I was given by a guest speaker at a Thinking Australia (Migration Agent) Seminar, where experts were answering questions put to them about moving to Australia. One couple at the Seminar were looking to rent their house out in the UK rather than sell just in case life down under wasn’t for them and they wanted to move back to the UK after a year or so. They were told by the expert that if they brought money into Australia after living there longer than six months they would have to pay capital gains tax on it. So another couple who were looking to travel out to Australia and get their Visa validated within the twelve month permitted period were concerned that this would trigger the six month period for bringing money into Australia tax free, because they hadn’t put their house on the market and didn’t know how long it would take to sell. So they were told not to worry because the six months didn’t start until they were living in Australia permanently and this would be when they had jobs and paying Australian taxes. I am not looking to mislead anyone, so if you know something different please let me know. Best Regards Nigel Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 17, 2008 Share Posted May 17, 2008 Hi Andrew, I would be interested to know which part of my message you feel is untrue, I am passing on information I was given by a guest speaker at a Thinking Australia (Migration Agent) Seminar, where experts were answering questions put to them about moving to Australia. One couple at the Seminar were looking to rent their house out in the UK rather than sell just in case life down under wasn’t for them and they wanted to move back to the UK after a year or so. They were told by the expert that if they brought money into Australia after living there longer than six months they would have to pay capital gains tax on it. So another couple who were looking to travel out to Australia and get their Visa validated within the twelve month permitted period were concerned that this would trigger the six month period for bringing money into Australia tax free, because they hadn’t put their house on the market and didn’t know how long it would take to sell. So they were told not to worry because the six months didn’t start until they were living in Australia permanently and this would be when they had jobs and paying Australian taxes. I am not looking to mislead anyone, so if you know something different please let me know. Best Regards Nigel Hello Nigel, The first thing is the visa that people are entering on. If It's a PR visa, then if they intend to come to Australia for greater than six months (this is the main test but there are others), then Australian CGT will apply, as well as UK CGT. If they are coming for less than six months, then no issue. Hence, a "recon trip" to Australia is fine and I think this is what your migration agent was talking about at the seminar. If you don't come in on a PR visa, then there's no Australian tax implication at all. If you are an Australian tax resident, then if you have more than A$250k in a bank account overseas, you have an issue. Australia will seek to tax the foreign exchange rate gain. Now, if you sold a house, for instance, and then left he money in a UK account, this issue could occur. In terms of just transferring money between the two countries, ordinarily there is not an issue from either end. There's a whole of rules that come into play with cross-border issues and UK migration agents (even if they are an expert in that field) are being negligent by offering complex tax advice, covering two tax jurisdictions. Cheers, Andrew Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 17, 2008 Share Posted May 17, 2008 Hi, As a UK citizen you still get your tax allowance so, if no profit... no tax. You just have to fill in a form before you go and one each financial year. We are in the same situation and I phoned iup the tax office who, surprisingly, were really helpful and knowledgeable. Good luck Whilst there is not a UK liability, if you're PR, you need to disclose this in Australia. You should do so as it is likely you will gain an Australian tax benefit from doing so, due to the ways deductions are dealt with. Link to comment Share on other sites More sharing options...
Guest datum1m Posted May 17, 2008 Share Posted May 17, 2008 Hello Nigel, The first thing is the visa that people are entering on. If It's a PR visa, then if they intend to come to Australia for greater than six months (this is the main test but there are others), then Australian CGT will apply, as well as UK CGT. If they are coming for less than six months, then no issue. Hence, a "recon trip" to Australia is fine and I think this is what your migration agent was talking about at the seminar. If you don't come in on a PR visa, then there's no Australian tax implication at all. If you are an Australian tax resident, then if you have more than A$250k in a bank account overseas, you have an issue. Australia will seek to tax the foreign exchange rate gain. Now, if you sold a house, for instance, and then left he money in a UK account, this issue could occur. In terms of just transferring money between the two countries, ordinarily there is not an issue from either end. There's a whole of rules that come into play with cross-border issues and UK migration agents (even if they are an expert in that field) are being negligent by offering complex tax advice, covering two tax jurisdictions. Cheers, Andrew Hi Andrew, Are you saying the information in my original message is correct if migrating to Australia on a permanent resident’s visa? If the property to be sold in the UK is your sole residence and you have lived in it for more than a year I didn’t think CGT applied to any of the money you may make from its sale. When the information was given at the seminar I felt it was unfair that you had to sell your home in the UK and bring your money across within the six month period or have to pay CGT, because with the exchange rates and UK housing market being so bad at the moment it doesn’t give you the opportunity to hold onto your property for say a year to see how the market performs or sell it now and wait longer than six months to see if the exchange rate improves. Although the second option may be ok if you could open a Pound Sterling account with an Australian bank, because you would have then brought your money into Australia within the six month period and also have the opportunity to convert it into dollars when the exchange rates improve. Regards Nigel Link to comment Share on other sites More sharing options...
Kabroom Posted May 17, 2008 Share Posted May 17, 2008 Hi, This thread is confusing me and worrying me a little bit, we are flying out on the 1st Sept and I am on a pr spouse visa but our house is still on the market and what with the housing market as it is we don't know when it will sell. So does that mean if it sells after my initial six months in oz then I have to pay cgt? Link to comment Share on other sites More sharing options...
Guest datum1m Posted May 17, 2008 Share Posted May 17, 2008 Hi, This thread is confusing me and worrying me a little bit, we are flying out on the 1st Sept and I am on a pr spouse visa but our house is still on the market and what with the housing market as it is we don't know when it will sell. So does that mean if it sells after my initial six months in oz then I have to pay cgt? Hi, As I understand it yes you would have to pay CGT on money brought into OZ after the initial six month period, because it would be classed as income when you are living in OZ under a PR type Visa. I think AndrewL also confirms this to be the case, but I am waiting for a reply from him on this point. I must stress this information was given to me while attending a seminar about moving and living in Australia and not from any official Australian government web-site, so it would be best to make your own enquires about to be sure that I am correct. Regards Nigel Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 17, 2008 Share Posted May 17, 2008 Hi Andrew, Are you saying the information in my original message is correct if migrating to Australia on a permanent resident’s visa? If the property to be sold in the UK is your sole residence and you have lived in it for more than a year I didn’t think CGT applied to any of the money you may make from its sale. When the information was given at the seminar I felt it was unfair that you had to sell your home in the UK and bring your money across within the six month period or have to pay CGT, because with the exchange rates and UK housing market being so bad at the moment it doesn’t give you the opportunity to hold onto your property for say a year to see how the market performs or sell it now and wait longer than six months to see if the exchange rate improves. Although the second option may be ok if you could open a Pound Sterling account with an Australian bank, because you would have then brought your money into Australia within the six month period and also have the opportunity to convert it into dollars when the exchange rates improve. Regards Nigel Hi, Apologies, no CGT if it's your only residence. Additionally, if you have more than one, then this whole 6 month thing is still irrelevant. You get a cost base as of the date you enter Australia with a permanent resident visa. You will pay CGT in both countries, albeit on different gains, at different tax rates. You will get partial double tax relief. Cheers, Andrew Link to comment Share on other sites More sharing options...
Guest AndrewL Posted May 17, 2008 Share Posted May 17, 2008 Hi, This thread is confusing me and worrying me a little bit, we are flying out on the 1st Sept and I am on a pr spouse visa but our house is still on the market and what with the housing market as it is we don't know when it will sell. So does that mean if it sells after my initial six months in oz then I have to pay cgt? Only if you buy another house in Australia. Link to comment Share on other sites More sharing options...
Guest spock Posted May 17, 2008 Share Posted May 17, 2008 Thanks for all this. It's very helpful, and we've decided not to rent. I'm going to get another job and we'll stick it out until it sells. And we don't have to worry about my friend's dog trashing the place (we know her - she used to be ours!!). Cheers, James. Link to comment Share on other sites More sharing options...
Kabroom Posted May 17, 2008 Share Posted May 17, 2008 Only if you buy another house in Australia. That's reassuring because buying in Australia is not an option until we sell in the Uk. Link to comment Share on other sites More sharing options...
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