ATO Capital Gains Tax on sale of U.K. home

[Garrier]

Hi

 

Myself (a permanent resident since 2011) and my partner (a temporary 457 resident since 2017) would like to sell our U.K. home which we bought in 2015 and lived in for just over 2 years until we went down under in 2017. We have rented our property out (with numerous items still in the shed) and are now looking to sell it. We also have been since renting in Sydney and have not bought anywhere else.

My question is, before we make any decision to tell our tenants we are selling, will be have to pay Capital Gains tax in Australia on any increase in value of our home both as me being a permanent resident and my partner being a temporary one ? I know there is a 6 year rule on main residences (which I think this would qualify as) but am unsure as to whether both of us could avail of it being on different visas. I understand the U.K. system as we know we will also be liable there also (I believe there will be no charge if we sell before April 2020).

Once we have the answer to this question we can therefore start the sale process, we would then like to find a competent tax advisor who can submit all our forms to the relevant tax authorities and that can minimise any tax to be paid.

Thanks in advance.

[paulhand]

I’d suggest you speak with a tax agent such as @Alan Collett who is knowledgeable in cross border issues. 

[MARYROSE02]

Keep me informed as I will probably have to sell my UK house at some point although I already post a self assessment UK tax return every year so I guess there is somewhere on that form to report it.

[Ken]

16 hours ago, Garrier said:

Hi

 

Myself (a permanent resident since 2011) and my partner (a temporary 457 resident since 2017) would like to sell our U.K. home which we bought in 2015 and lived in for just over 2 years until we went down under in 2017. We have rented our property out (with numerous items still in the shed) and are now looking to sell it. We also have been since renting in Sydney and have not bought anywhere else.

My question is, before we make any decision to tell our tenants we are selling, will be have to pay Capital Gains tax in Australia on any increase in value of our home both as me being a permanent resident and my partner being a temporary one ? I know there is a 6 year rule on main residences (which I think this would qualify as) but am unsure as to whether both of us could avail of it being on different visas. I understand the U.K. system as we know we will also be liable there also (I believe there will be no charge if we sell before April 2020).

Once we have the answer to this question we can therefore start the sale process, we would then like to find a competent tax advisor who can submit all our forms to the relevant tax authorities and that can minimise any tax to be paid.

Thanks in advance.

On a temporary visa you are not normally taxed on foreign income (including foreign capital gains) - should apply to your partner (but if they are some unusual circumstance that does have to pay tax on foreign income then they ought to be able to claim the main residence exemption).

On a permanent visa you are taxed on foreign income (including foreign capital gains) but as you already know you can claim a house you used to live in as your main residence for 6 years after you used to live there and there is no taxable capital gain on your main residence. It gets complicated where you've already bought another house but as you're still renting it should be no problem.

You say you understand the U.K. system so I won't explain that - just don't forget that you need to report the sale to HMRC even if there is nothing to pay. There aren't any forms that you'll need to submit in Australia ("claiming" the main residence exemption doesn't actually involve doing anything).

[Alan Collett]

On 06/08/2019 at 23:40, Garrier said:

Hi

 

Myself (a permanent resident since 2011) and my partner (a temporary 457 resident since 2017) would like to sell our U.K. home which we bought in 2015 and lived in for just over 2 years until we went down under in 2017. We have rented our property out (with numerous items still in the shed) and are now looking to sell it. We also have been since renting in Sydney and have not bought anywhere else.

My question is, before we make any decision to tell our tenants we are selling, will be have to pay Capital Gains tax in Australia on any increase in value of our home both as me being a permanent resident and my partner being a temporary one ? I know there is a 6 year rule on main residences (which I think this would qualify as) but am unsure as to whether both of us could avail of it being on different visas. I understand the U.K. system as we know we will also be liable there also (I believe there will be no charge if we sell before April 2020).

Once we have the answer to this question we can therefore start the sale process, we would then like to find a competent tax advisor who can submit all our forms to the relevant tax authorities and that can minimise any tax to be paid.

Thanks in advance.

 

Please feel able to send a private message to me.

We can then perhaps tee up a date and a time to have a free initial chat.

Best regards.