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Capital Gains Tax

Capital Gains Tax

Old Jul 2nd 2019, 2:16 am
  #1  
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Default Capital Gains Tax

Hi there,

We have been in Australia now for 12 years, have citizenship and we now are thinking about selling our house in the UK, which we currently rent out. We are looking to buy here in Australia.

We've done quite a bit of research, but we have no idea of how much Capital Gains Tax we would have to pay on it and whether or not it would be worth selling it or maybe just keeping it as an investment.

Any hints and tips would be appreciated or anyone knows of a good adviser that would be helpful.

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Old Jul 2nd 2019, 7:12 am
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Default Re: Capital Gains Tax

You need to find out what it was worth when you left the UK in Sterling, get the exchange rate on the day you left UK and then convert the value to Oz$. This is your baseline for the value of your UK house.
Now when you sell, you get the exchange rate on the day you (exchange or complete not sure which) and this is your sale price (less all sale costs). Subtract one from the other you now have the value for CGT purposes.

To reduce your CGT liability you can make before tax contributions to Super if you are eligible.
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Old Jul 2nd 2019, 7:48 am
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Default Re: Capital Gains Tax

KiwiPaul is spot on.
Just to add .. the price is the exchange rate at the date of contract exchange even if the contract is conditional on finance etc.
The difference between the two figures is then divided in half (the CG deduction amount) and that amount is included in your assessable income.
If owned jointly half goes into each person's name/tax return.
The actual tax payable depends upon your marginal rate. (As Kiwipaul points out you can reduce your assessable income for the year by making super contributions but be careful you don't exceed the maximum contribution rates etc.)

The difficult point will be the value as at when you left the UK.
First thing to remember is that it is self assessment. Accordingly your valuation will not be challenged unless your return is selected for audit.
Accordingly you may be able to access the internet and form a good view on a reasonable price. Council rating valuations etc from the time could also be useful. As a last resort you can get a sworn valuation but that will cost. If you are "sensible" with your valuation you should be fine.. just document how you went about coming to your decision.
Good luck
PS: the above assumes no tax in the UK on the sale. If you do pay tax in the UK you may qualify for a foreign tax credit in Australia

Last edited by carbolic; Jul 2nd 2019 at 8:05 am.
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Old Jul 2nd 2019, 8:49 pm
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Default Re: Capital Gains Tax

You may well have a liability to UK CGT too - have a look here. Note that even if you don't have a liability, you have to submit a return within 30 days of completion to avoid being fined by HMRC.
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Old Jul 3rd 2019, 4:39 am
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Default Re: Capital Gains Tax

https://www.bdhtax.com/news/capital-...-nrcgt-return/
This webpage might be of interest.

Feel able to send a private message to me if you would like a freebie initial chat.

Best regards.
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Old Jul 14th 2019, 12:11 am
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Default Re: Capital Gains Tax

Thanks very much everyone for your assistance. We are now thinking we should hang on to it and keep it as an investment property due to the CGT.

Cheers
Jo

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