Timing a UK Rental Property Sale

[MTut]

Hi,

 

I'm planning to move to Aus with on a Partner Visa (I'm married to an Aussie) in approximately 12 months time.

 

I have a Rental property here that I'm planning to sell before I go, so just looking at time frames and how best to do it from a tax perspective. There'll be a decent amount of capital gains tax to pay.

 

To keep things simple, i think it'd be best to sell it before UK tax year end in April. However, these things are not likely to be simple!

 

If it were to sell in May or June, how would that fit with having to report it on an Australian income tax return as obviously their year doesn't start until July?

 

Or would they take an interest in it, as it would be on my UK 2016-17 return and par tof my worldwide income?

 

I've not lived in the place in the last 6 years so no PPR opportunities. I'd feel a lot more confident with reducing the tax if left to just using UK rules!

[desreb]

From what I understand, it's split according to when you land in the country. So if you sell before you arrive in Oz, then the ATO need not consider it at all.

[Ken]

Hi,

 

I'm planning to move to Aus with on a Partner Visa (I'm married to an Aussie) in approximately 12 months time.

 

I have a Rental property here that I'm planning to sell before I go, so just looking at time frames and how best to do it from a tax perspective. There'll be a decent amount of capital gains tax to pay.

 

To keep things simple, i think it'd be best to sell it before UK tax year end in April. However, these things are not likely to be simple!

 

If it were to sell in May or June, how would that fit with having to report it on an Australian income tax return as obviously their year doesn't start until July?

 

Or would they take an interest in it, as it would be on my UK 2016-17 return and par tof my worldwide income?

 

I've not lived in the place in the last 6 years so no PPR opportunities. I'd feel a lot more confident with reducing the tax if left to just using UK rules!

 

If you sell if before you become liable to become resident for tax purposes there will be no Australian tax to pay. If you sell it afterwards you'll only be liable to tax in Australia on the gain for the period in which you were resident and would be entitled to deduct the UK tax paid from the Australian tax due under the double taxation agreement. You could have the property valued before you leave (possibly proving the entire gain was made before you left) or the total gain would be pro-rated (the period you were in Australia divided by the period you owned the property).

 

I'm not sure selling before the end of the UK tax year is in your best interest. If your UK income in 2017-18 is going to be a lot less than in 2016-17 (as it would be if you're going to leave the country early in that tax year) you may find there's less tax to pay on the gain by having it on your 2017-18 tax return.

[MTut]

Cheers guys. Yes, that ties up with some other bits I'd read.

 

If the Aus taxation guys are only going to take an interest from the point that I land for good in Australia, it takes off a fair bit of pressure to get it done before I go. (Although it's obviously a bit of a pain to do paperwork from abroad.)

 

As you say Ken, I'm likely to have lower earnings either way next tax year as I don't expect to have a job lined up before I go. So with a bit of planning like offsetting some UK income with a pension contribution and such I can probably keep things relatively under control.

 

Thanks all.