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Wanderer Returns

Selling UK home, and buying in Australia - Capital Gains Tax due?

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Dear Andrew,

I'm an Australian & British citizen who has been living in the UK for almost 5 years now. I will be returning to Australia next January to live and work permanently. As I am an Australian citizen who will be returning to Australia, I believe that for tax purposes I will be classed as an Australian resident on arrival. I only own one property, which is here in the UK. However, this is unlikely to be sold until after I arrived back in Australia. As I will already be an Australian resident for tax purposes at that time, will the sale of my home here in the UK attract capital gains tax in Australia?

Many thanks your assistance in this matter,

Martin.

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Hi Martin

 

Sorry for the delay, I've asked the Mods to move this question to the Money and Finance section, there's a couple of tax guys who post regularly on their that might be better top answer this.

Regards

Andy

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Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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2 hours ago, Andrew from Vista Financial said:

Hi Martin

 

Sorry for the delay, I've asked the Mods to move this question to the Money and Finance section, there's a couple of tax guys who post regularly on their that might be better top answer this.

Regards

Andy

Done

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I just want PIO to be a happy place where people are nice to each other and unicorns poop rainbows

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Posted (edited)
On 05/06/2019 at 19:34, Wanderer Returns said:

Dear Andrew,

I'm an Australian & British citizen who has been living in the UK for almost 5 years now. I will be returning to Australia next January to live and work permanently. As I am an Australian citizen who will be returning to Australia, I believe that for tax purposes I will be classed as an Australian resident on arrival. I only own one property, which is here in the UK. However, this is unlikely to be sold until after I arrived back in Australia. As I will already be an Australian resident for tax purposes at that time, will the sale of my home here in the UK attract capital gains tax in Australia?

If it remains your principal place of residence then no capital gains tax is payable in Australia.    If you buy a home in Australia then it ceases to be your principal place of residence and is liable, but only on the profit you made since you ceased living in it - so make sure to get an independent valuation when you leave, so you know exactly what your profit is. 

If you don't buy a property in Australia but decide to rent instead, then you can continue to claim your home in the UK as your principal place of residence for 6 years, so no capital gains payable if you sell within that time.

I'm not an accountant but have held investment properties and have paid capital gains (ouch)

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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9 hours ago, Marisawright said:

If it remains your principal place of residence then no capital gains tax is payable in Australia.    If you buy a home in Australia then it ceases to be your principal place of residence and is liable, but only on the profit you made since you ceased living in it - so make sure to get an independent valuation when you leave, so you know exactly what your profit is. 

If you don't buy a property in Australia but decide to rent instead, then you can continue to claim your home in the UK as your principal place of residence for 6 years, so no capital gains payable if you sell within that time.

I'm not an accountant but have held investment properties and have paid capital gains (ouch)

Thank you again Marisa - you are a mine of useful information! We couldn't afford to buy a property in Australia until we had sold our house in the UK, and I don't think we'd rent it out for as long as 6 years, so I don't think it will be an issue for us. Good to know though! 🙂

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Hi Martin.

Have a look into the requirement to submit a Non Resident CGT return with HMRC if selling a UK residential property as a non-UK resident person.

Best regards.

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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

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13 hours ago, Wanderer Returns said:

Thank you again Marisa - you are a mine of useful information! We couldn't afford to buy a property in Australia until we had sold our house in the UK, and I don't think we'd rent it out for as long as 6 years, so I don't think it will be an issue for us. Good to know though! 🙂

I read up on this heaps. If you sell within a certain time  (18 months I think, its changed recently) there is never anything to pay you are immune. But you still have to do a non resident capital gains return within the time limit (which is quite short). I did it got a low key email a few weeks later saying it had been accepted.

Hardly anyone has to pay anything in any case. There are three ways to calculate the cg and u can pick the best for your circumstances

You can get the valuation when u leave but its the value in 2015 that counts which is strange. .. if you leave in 2019 sell in 2022 for example you will, depending on the gain pay some ratio of 3 out of 7 years gain depending on the method u choose.

Really the main benefactor are accountants. They charge a few hundred quid to do a return for a zero bill. I did mine myself but it was simple as sold within 18 months of leaving uk

 

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That 18 month period only applies if you are selling a former main residence - and is reducing to 9 months for disposals after the end of this UK tax year.

Don't forget Letting Relief (availability also limited from the end of this tax year), and the UK's CGT Annual Exemption - assuming you are eligible for it (UK citizens are).

The April 2015 valuation only pertains if you owned the property before that date.

Not sure the main benefactors are accountants - the main benefactor might be you if the accountant saves you tax and helps you avoid a late filing penalty for not submitting the NRCGT return on time.   I can assure you there are many who have had late filing penalties of as much as £1,600, even if they have had no tax to pay following the sale of their UK property.

Best regards.

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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

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29 minutes ago, Alan Collett said:

That 18 month period only applies if you are selling a former main residence - and is reducing to 9 months for disposals after the end of this UK tax year.

Don't forget Letting Relief (availability also limited from the end of this tax year), and the UK's CGT Annual Exemption - assuming you are eligible for it (UK citizens are).

The April 2015 valuation only pertains if you owned the property before that date.

Not sure the main benefactors are accountants - the main benefactor might be you if the accountant saves you tax and helps you avoid a late filing penalty for not submitting the NRCGT return on time.   I can assure you there are many who have had late filing penalties of as much as £1,600, even if they have had no tax to pay following the sale of their UK property.

Best regards.

Sure not filing ontime is not a good idea. The system is very awkward to use i should say you have to email computations to an email address after getting the confirmation of receipt and then nothing more happens..

In a way that's why its set up to benefit accountants most of all, system for systems sake no tax to pay only fines for filing late

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10 hours ago, Alan Collett said:

That 18 month period only applies if you are selling a former main residence - and is reducing to 9 months for disposals after the end of this UK tax year.

Don't forget Letting Relief (availability also limited from the end of this tax year), and the UK's CGT Annual Exemption - assuming you are eligible for it (UK citizens are).

Many thanks for all your replies.
My friend who is a tax adviser told me that it's now 9 months, but for us our exposure to CGT won't be significant as our house is not high value and we haven't owned it very long.

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It isn’t the value per se, but any gain you have made that is taxed.  This will also involve exchange rates. 

I really don’t know why people have a thing about accountants, they are professionals in an increasingly complicated field. Bet you pay a mechanic to service your car........

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29 minutes ago, rammygirl said:

It isn’t the value per se, but any gain you have made that is taxed.  This will also involve exchange rates. 

I really don’t know why people have a thing about accountants, they are professionals in an increasingly complicated field. Bet you pay a mechanic to service your car........

The problem is that tax authorities in both uk and aus and possibly around the world create these stupid systems which are overly complicated so that many people have to pay accountants to sort it out. This creates more work for accountants. Nobody ever paid any NRCGT, its just a UK political vote winner, the only money changing hands is fines to the tax office and fees to accountants.

Accountants are very useful people in the right circumstances and are highly trained individuals. I used to run a business in the uk and in this case their support and skills were invaluable. The reason people don't; like them, particularly in Australia is that the likes of H&R block are pretty much leaching off the fact that Australia makes everyone do a tax return even one job salary people and claim they can save their fee with deductions alone. Once you actually use them all they can come up with is $35.86 in laundry fee deductions and a $300 bill 🤣

 

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2 hours ago, Wanderer Returns said:

Many thanks for all your replies.
My friend who is a tax adviser told me that it's now 9 months, but for us our exposure to CGT won't be significant as our house is not high value and we haven't owned it very long.

Not yet 9 months ... from 6 April 2020, subject to the outcome of the consultative process: https://www.gov.uk/government/consultations/capital-gains-tax-private-residence-relief-changes-to-the-ancillary-reliefs

Best regards.

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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

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10 minutes ago, can1983 said:

The problem is that tax authorities in both uk and aus and possibly around the world create these stupid systems which are overly complicated so that many people have to pay accountants to sort it out. This creates more work for accountants. Nobody ever paid any NRCGT, its just a UK political vote winner, the only money changing hands is fines to the tax office and fees to accountants.

Accountants are very useful people in the right circumstances and are highly trained individuals. I used to run a business in the uk and in this case their support and skills were invaluable. The reason people don't; like them, particularly in Australia is that the likes of H&R block are pretty much leaching off the fact that Australia makes everyone do a tax return even one job salary people and claim they can save their fee with deductions alone. Once you actually use them all they can come up with is $35.86 in laundry fee deductions and a $300 bill 🤣

 

"Nobody ever " ...?

What about non UK residents with a UK investment property?

Best regards.

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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

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7 hours ago, Alan Collett said:

"Nobody ever " ...?

What about non UK residents with a UK investment property?

Best regards.

They are just jealous Alan; secretly everyone wishes they were an accountant 🙂  Jon, ACMA, CGMA, shortly CPA ha.

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PR (100) planning to move to Perth by then end of 2019!

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11 hours ago, Jon the Hat said:

They are just jealous Alan; secretly everyone wishes they were an accountant 🙂  Jon, ACMA, CGMA, shortly CPA ha.

...until they're all replaced by AI, Jon! 🤖

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Many thanks to everyone for their input and all the really useful info. I never would have thought that Capital Gains Tax could be such an exciting topic of conversation!

I will keep my eye on that nine months window from April 2020, but hopefully we will have sold our property well before then. And I’ll make sure I complete the NRCGT on time too.

Kind regards,

Martin.

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14 minutes ago, Wanderer Returns said:

...until they're all replaced by AI, Jon! 🤖

Ah that is mostly a myth;  I should know being head of delivering digital finance for a $5Bn multinational company 🙂.  

 

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PR (100) planning to move to Perth by then end of 2019!

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17 hours ago, Jon the Hat said:

Ah that is mostly a myth;  I should know being head of delivering digital finance for a $5Bn multinational company 🙂.  

 

The problem with using AI systems for tax is that they are logic based, yet no tax system in the world is based on logic (they may have started out logically but then politicians got their hands on them).


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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4 hours ago, Ken said:

The problem with using AI systems for tax is that they are logic based, yet no tax system in the world is based on logic (they may have started out logically but then politicians got their hands on them).

Isn't that the truth!  Too many exceptions, too many changing rules, formats, codes etc.  This is why the likes of Thomas Reuters are making so much money...


PR (100) planning to move to Perth by then end of 2019!

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20 hours ago, Ken said:

The problem with using AI systems for tax is that they are logic based, yet no tax system in the world is based on logic (they may have started out logically but then politicians got their hands on them).

It’s a common yet understandable misconception that AI decision-making is purely logic-based. In the beginning this was true to a certain extent, but AI has always been about adapting machine learning to make the best decisions based on incomplete or ambiguous data, just as we humans do. The difference is that AI is now so advanced it can rewrite its own software based on previous outcomes and already rivals us in terms of ‘intelligence’, if not yet empathy. The machines are coming, and it’s dangerous to assume that any job is just too complicated to be automated. I'm in my 50s now so none of this is really going to bother me too much, but if I was just starting out then I'd definitely be concerned about choosing a future-proof career.

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3 hours ago, Wanderer Returns said:

It’s a common yet understandable misconception that AI decision-making is purely logic-based. In the beginning this was true to a certain extent, but AI has always been about adapting machine learning to make the best decisions based on incomplete or ambiguous data, just as we humans do. The difference is that AI is now so advanced it can rewrite its own software based on previous outcomes and already rivals us in terms of ‘intelligence’, if not yet empathy. The machines are coming, and it’s dangerous to assume that any job is just too complicated to be automated. I'm in my 50s now so none of this is really going to bother me too much, but if I was just starting out then I'd definitely be concerned about choosing a future-proof career.

I think AI and robotics are very different things. We are replacing lots of people with robotics software. A computer doesn't need to be logical, it just needs rules. Doesn't matter how complicated tax rules are, you can always cover every eventuality. Data entry, even when human input is required can be replaced by robotics.

When you 'chat' with someone online, when you seek help on a website, you quite often aren't talking with a person. Not initially anyway. The replies in an early conversation are very predictable.

But as you say, AI takes that a step further, where behaviour is modified depending on outcomes. I would guess robotics is much more advanced than AI.

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2 hours ago, newjez said:

I think AI and robotics are very different things. We are replacing lots of people with robotics software. A computer doesn't need to be logical, it just needs rules. Doesn't matter how complicated tax rules are, you can always cover every eventuality. Data entry, even when human input is required can be replaced by robotics.

When you 'chat' with someone online, when you seek help on a website, you quite often aren't talking with a person. Not initially anyway. The replies in an early conversation are very predictable.

But as you say, AI takes that a step further, where behaviour is modified depending on outcomes. I would guess robotics is much more advanced than AI.

AI and Robotics are indeed very different technologies. Robots are machines which can be programmed to do tasks. They can operate autonomously using software, which may or may not incorporate AI, for example robots in the manufacturing industry. The chatbots you mentioned use AI, but they are not robots because they have no physical capability. The challenges faced by Robotics engineers are primarily mechanical, electrical, and electronic, whereas artificial intelligence requires an understanding of computer and data science. They are like chalk and cheese. Sorry for being a bore, but this has happens to be my field. I’ve no idea how we got here from capital gains tax though! 🤔

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8 hours ago, Wanderer Returns said:

AI and Robotics are indeed very different technologies. Robots are machines which can be programmed to do tasks. They can operate autonomously using software, which may or may not incorporate AI, for example robots in the manufacturing industry. The chatbots you mentioned use AI, but they are not robots because they have no physical capability. The challenges faced by Robotics engineers are primarily mechanical, electrical, and electronic, whereas artificial intelligence requires an understanding of computer and data science. They are like chalk and cheese. Sorry for being a bore, but this has happens to be my field. I’ve no idea how we got here from capital gains tax though! 🤔

My company uses https://www.google.com/url?sa=t&source=web&rct=j&url=https://en.wikipedia.org/wiki/Blue_Prism&ved=2ahUKEwjz36PD4-ziAhVyThUIHRecDCAQFjARegQIAhAB&usg=AOvVaw0svc14EHyDivW1angnWuY9&cshid=1560646162721

I'm not that involved in it, but I'd like to be as it seems to be a growth industry.

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