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Capital Gains Tax on UK property


Guest MicheleM

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Guest MicheleM

I am selling a property in the UK which used to be my home, but have been renting since being resident in Australia from January 2007. I've been advised by Australian accountants that because the property was my home, I wouldn't be subject to CGT tax in either country, however I also read elsewhere that to be exempt from UK CGT you need to be non-resident for 5 full tax years - but does this apply to properties that we lived in?

Has anyone had any experience of this? Maybe I should just contact a UK tax advisor?

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Guest Guest31881

Hi,

 

Welcome to PIO,

 

I believe that if it is your primary residence in the Uk then it would be exempt, but i would suggest contacting an expert to get proper advice.

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  • 2 years later...

Good afternoon

 

Please could you confirm if I would I need to pay tax on any profit made as a result of selling my UK property?

I bought the property around 7-8 years ago for 120,000 GBP, I lived in it for 2-3years (prime residency) and have rented it out since 2009 when I moved to Australia. ( i'm now a permanent resident in Australia, applying for citizenship in May 2014)

 

I've just put my property on the market (Feb 14) for 150,000 GBP. will probably accept 145,000 (sale) - mortgage till owed = profit of 34,000 GBP (fees not included)

Regards

Martyn

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Guest John Horvath

The laws in the UK on capital Gains for non residents are intended to be changed so that from April 2015 you will be liable to Capital gains on a sale of property in the UK. The rules for capital gains on foreign property assets etc can easily be obtained from the ATO site.

 

A factor on whether or not you may be granted concessions on CGT in Australia will depend on whether or not you are a home owner in Australia and whether or not the UK property is still regarded as you primary residence for tax purposes. (even though it was rented out). Give the ATO a call and they will give you the umpires decision on your circumstances.

 

I hope the above helps

 

John Horvath Financial Adviser/ Finance Broker

Gold Vision Financial Services

Edited by noworriesmate
removed email and phone No as per forum rules
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Cheers. Yeah I read that too, but then read another thread that said something different... Now I'm confused..... Help!

 

 

THis is an old thread I read something on here the other day that you take the value of the house when you entered Australia and not the Purchase price as the base price for an Capital Gain calculation. Havent a clue how you prove that value.. if thats true
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The laws in the UK on capital Gains for non residents are intended to be changed so that from April 2015 you will be liable to Capital gains on a sale of property in the UK. The rules for capital gains on foreign property assets etc can easily be obtained from the ATO site.

 

A factor on whether or not you may be granted concessions on CGT in Australia will depend on whether or not you are a home owner in Australia and whether or not the UK property is still regarded as you primary residence for tax purposes. (even though it was rented out). Give the ATO a call and they will give you the umpires decision on your circumstances.

 

I hope the above helps

 

John Horvath Financial Adviser/ Finance Broker

Gold Vision Financial Services www.goldvision.com.au 0414 291467

 

 

> There is not yet any information about the UK's CGT provisions which may or may not be introduced in April 2015. A consultation was indicated by the UK Chancellor in his Autumn Statement, and it remains to be seen what changes might eventuate.

 

> I disagree with placing any reliance on a phone conversation with the Tax Office - they are not bound to any comments they might make. The ATO is only locked into advice provided if you obtain a Private Binding Ruling.

 

Take professional advice from a registered tax agent who is experienced in this area if you want advice on which you can rely.

 

Best regards.

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Guest John Horvath

Alan comments are to be respected as often the client services officers initially taking a call can not answer your questions especially if they are complex. Armed with a basic knowledge of the issues seek professional advice on the issue from a suitable professional. Websites in Australia are good in providing the basics only to work from - they should never be relied on for an answer to complex issues - so seek a professional in these cases.

 

cheers john

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Good afternoon

 

Please could you confirm if I would I need to pay tax on any profit made as a result of selling my UK property?

 

I bought the property around 7-8 years ago for 120,000 GBP, I lived in it for 2-3years (prime residency) and have rented it out since 2009 when I moved to Australia. ( i'm now a permanent resident in Australia, applying for citizenship in May 2014)

 

I've just put my property on the market (Feb 14) for 150,000 GBP. will probably accept 145,000 (sale) - mortgage till owed = profit of 34,000 GBP (fees not included)

 

Regards

Martyn

 

On the Basis you moved to Australia in 2009 if you have been away from the UK for over 5 years then there is no UK capital gain tax payable as after 5 years it is disregarded (But only at present). The UK Government proposes to change this from April 2015 so that overseas property owners are liable to CGT.

 

The Australian CGT will depend on whether you have bought another home and are counting it as your main residence. There are guides on the ATO website. However if you have not purchased another property then you may be able to claim the 6 year exemption if the property was your main residence. Again see the ATO website.

Also if you are liable to CGT then it is based on the value that it was when you either entered Australia or became a permanent resident depending if you entered on a 457 visa or not. This is also done at the value in Australian Dollars on that particular day. The ATO also has historical exchange rates on its web site. If the AUD is higher now than when you were made a tax resident then this also reduces the tax as the profit is smaller in AUD. see also sites like XE.com

 

The value may be able to be ascertained from websites such as Zoopla which give land registry sale values for particular postcodes.

This is more easily done if you had very similar properties in your street which is often the case in the UK.

 

Also not sure that your figures of a profit of 34000 stack up as it has nothing to do with the value of any mortgage. it is a simple base cost plus or minus the selling figure eg if your base cost was 120,000 and you sold it for 145,000 then the gain is 25,000 not what you have left over after paying of the mortgage.

 

ON the basis when you came in 2009 if you arrived as a permanent resident in say February when the rate was around 45p to the dollar and the 2009 value of the house was 120,000 then the base cost would be around $266,000 and you sold it at 145000 when the exchange rate now may be around 52p then the value would be around $278000 a profit of $12,000.

 

Now as you have owned it for over a year then this $12,000 is reduced to $6,000 and you pay tax at your marginal rate on the $6,000.

 

Sorry to be long winded but I hope this helps.

 

I am no tax expert but I sold my own UK house after 12 years and took advice from a CPA accountant with Australian and UK credentials.

Edited by winter1
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Hi, I just sold my house in Scotland in January (although we have decided to move back so won't be transferring the money over here). I'd speak with a UK accountant/Tax adviser as you may be liable.

I bought my house in July 2003 and moved to Australia November 2010. You are exempt if it has been your permanent residence, but if you go overseas you are only allowed 3 years to remain exempt, then you become liable again. My accountant did a calculation where she broke down the ownership to months, then how may it was my sole reidence, how many months I was in Australia. It worked out that I was liable for the final 3 months. However, you have a tax free amount (£10,00 or something) so it worked out that I didn't owe anything. She is going to do that section of my tax return for me as I find it all a bit confusing. I'm not sure about any taxes you would pay transferring money to Australia...

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Hi, I just sold my house in Scotland in January (although we have decided to move back so won't be transferring the money over here). I'd speak with a UK accountant/Tax adviser as you may be liable.

I bought my house in July 2003 and moved to Australia November 2010. You are exempt if it has been your permanent residence, but if you go overseas you are only allowed 3 years to remain exempt, then you become liable again. My accountant did a calculation where she broke down the ownership to months, then how may it was my sole reidence, how many months I was in Australia. It worked out that I was liable for the final 3 months. However, you have a tax free amount (£10,00 or something) so it worked out that I didn't owe anything. She is going to do that section of my tax return for me as I find it all a bit confusing. I'm not sure about any taxes you would pay transferring money to Australia...

 

 

You are not liable to UK CGT if the disposal takes place after you have ceased to be a resident of the UK (effective from 05/04/2013 - before that the disposal had to take place in a UK tax year in which you were never resident or ordinarily resident).

 

Though if you return to live in the UK after less than 5 years away there may be a chargeable gain.

 

It is technical, so professional advice is recommended.

 

Best regards.

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