MartinLuther

Unless they've changed the UK CGT rules since 2004 (which I don't think has happened) then they are as follows. You treat the last 3 years as if you lived in the place (even if you didn't). You then split the gain between the years that you lived there and the years that you didn't. If the value for the years that you didn't live there is less than GBP40k (or GBP80k if jointly owned) then you pay nothing.

For example. If you lived in the house for 5 years and you rented it out for 5 and the gain is 100k then you effectively lived their for 8 years (5+3). So the remainder is 2 years. 2/10 or 20% of 100k equals GBP 20k which is less than 40k, so nothing to pay.

The other plus point is that if you move away from the UK for more than 1 complete tax year and you do not return within 5 (I think) then you're not subject to UK-CGT anyway.

You won't have a problem with Aus-CGT if you rent when you get here and sell your house within 6 years of leaving it and before buying a house here.

Also when you buy here you could get some money off the government if you are both first time buyers in Aus.

So all good news.

Speargun

Thanks Martin that is fab advice and K sent accordingly!! Thankyou! So to clarify i own it jointly - if ive been there less than a year - ive been there over three years!! - if i sell it within three years - as long as it hasnt gone up over 160k - there wont be any tax to pay on it!

tillysmum

not sure but you might have to pay ordinary tax on the rent that you earn but could of course ofset some of the epenses against tax. I am going to ring tax here (uk) tomorrow to try to get some clarification as like you I cant afford to lose any of the capital on the property even though we will leave house empty I am not leaving it to chance and need some expert advice. Like you 18% is a lot of money and I take the point of a previous poster who said when we move to oz our residence there will be our main one so what is the house back in the Uk?. if you know what I mean

tillysmum

thanks martin luther just read your reply and it sort of makes sense so bit less stressed over it but may just ring tax man just to confirm

JAJ

If an 18% tax rate on gains/profits/income bothers you so much, then maybe Australia is not quite the right destination.

Relief for private residence has not been affected in the U.K. And once you are Australia tax resident, you have Australian capital gains tax to think about, although you may get an offset for any U.K. tax due.

MartinLuther

If you sell within 3 years you've got nothing to worry about.

Here's the word from the tax man. http://www.hmrc.gov.uk/helpsheets/ir283.pdf

I notice you only get the 40k allowance if you rent the property (and the 80k doesn't seem to be mentioned any more - although that may be hidden somewhere else).

As someone mentioned you are liable for tax on any rental profits. Something of note here is that you have to fill in a form to say that you'll pay the tax (if incurred). Otherwise the rental agent (or the tenant ) has to pay the tax for you.

tillysmum

have just soken to tax office here in Uk and this is what they had to say for our scenario. leaving uk in few months time with house unsold but still up for sale whats the situation with cgt here? tax man says we have 2 years to sell the house from leaving and dont pay any cgt at all if we dont sell then liable for some cgt but currently still on sliding scale as new reg dont come in until tax year 2009/2010 even then if in joint names you have atax free allowance first currently 9k each so if in joint names we only incur cgt after 18k. nade sense to me when he was explaining it hope it helps a little

MartinLuther

Why do I get the feeling the tax man was answering a different question?

Can you tell that I've had lots of experience with the UK tax man giving out incorrect advice?