Wait for proceeds from house sale prior to move back to Oz?

[Melbpom]

I know someone moving back to Australia from the UK. They have dual citizenship.

They are planning to sell their house prior to the move. The query is, is it better to wait for the completion of the sale before boarding the plane? Or wait for the money?

Is there a change in tax status as soon as they arrive back in Australia and would that trigger capital gains in the UK?

 

[InnerVoice]

13 hours ago, Melbpom said:

The query is, is it better to wait for the completion of the sale before boarding the plane? Or wait for the money?

Is there a change in tax status as soon as they arrive back in Australia and would that trigger capital gains in the UK?

The first question is subjective, but in my opinion the answer is 'Yes' because if the house sale falls through at the last minute and needs to go back on the market, you still have a place to live. It's what I did, but fortunately my mum was still alive at the time so I shipped my belongings once my house was under offer, and moved in with her for a few weeks until the sale completed. It was over Christmas, so she was quite happy to have me around.

I'm always wary about commenting on anything to do with tax and would recommend taking professional advice, but as a general rule you're usually not subject to CGT on the sale of your primary residence if you were residing in it for at least 90 days in any tax year, prior to leaving.

https://www.gov.uk/tax-live-abroad-sell-uk-home

[Ken]

On 03/06/2023 at 22:10, Melbpom said:

I know someone moving back to Australia from the UK. They have dual citizenship.

They are planning to sell their house prior to the move. The query is, is it better to wait for the completion of the sale before boarding the plane? Or wait for the money?

Is there a change in tax status as soon as they arrive back in Australia and would that trigger capital gains in the UK?

 

As a general rule it's when the sale becomes final, not when the money changes hands. For UK house sales that generally means exchange of contracts rather than completion date, but as InnerVoice  has pointed out if the sale falls through at the last moment it could be awkward. But I wouldn't expect any actual tax to be paid since even if the sale is deemed to be when they are in Australia, they will still have primary residence exemption in the UK (I think for 18 months after they stopped living there) and main residence exemption for Australian CGT (for up to 6 years).

There is a change of status that occurs when they arrive back in Australia because they become non-residents in the UK and they become residents in Australia. However, if the date of sale is shortly after they moved, the only practical difference is that they would be required to report the sale to HMRC within 60 days.

Edited June 11, 2023 by Ken