glhall

We are trying to sell our house in NZ but no luck so far. We want to move over to OZ in July 04. If we cant sell and have to rent our house out over here then sell it say a year later will we have to pay capital gains tax to the OZ tax department. If so what is the tax rate. We will make a decent capital gain on our house. If I have to pay a huge lump to Oz Govt we'll put the trip off until house is sold. I had a look on the Oz Govt tax site but it'll take hours to wade through that.
Thanks, Graham

MrsDagboy

Capital Gains tax is applicable at the same rate as your income tax for the year that the capital gains tax event (signing a contract) occurs. So if you earn over about $62,500 p/a then it will be taxed at 47%.

These are the personal tax rates -

$0 – $6,000 - Nil

$6,001 – $21,600 - 17c for each $1 over $6,000

$21,601 - $52,000 - $2,652 plus 30c for each $1 over $21,600

$52,001 – $62,500 - $11,772 plus 42c for each $1 over $52,000

Over $62,500 - $16,182 plus 47c for each $1 over $62,500


But if its your PPOR (primary place of residence) then there is a pro-rata which takes into account how long you have owned it & how long rented.

This page on the ATO site tells more.
http://www.ato.gov.au/individuals/co...tent/20427.htm

Not exhaustive, but a basic run down. Hope it helps.

glhall

Thanks for that MRs Dagboy. So its true then that if you owned a home for a few years in NZ and sell it a couple of months after arriving in OZ then you pay capital gains tax to OZ Govt. Sucks IMO. We wont be coming over til weve sold in that case. No capital gains tax in NZ

MrsDagboy

Graham, only if you rent it, you have a 6 month window in which you are able to have 2 PPOR while you dispose of one. If you sell it within that 6 months & dont rent it then there should be no CGT applicable. Its a bit complicated, someone better equipped than me might be able to answer it more fully .

Bix

I don't here Dagboy complaining

MrsDagboy

I wondered how long it would take for some smartarse to make a comment like that! LOL

ABCDiamond

There may be ways to avoid tax legally But you need to plan !

If you get a valuation done now, or just as you leave the house, then the ATO should take that as your base cost to calculate any capital gain. Therefore any "current" profit that you have made will be ignored. The result will then be that the only gain to be taxed will be between that value and the resulting sale price. A more fair and equitable result.

If you do want to confirm that with the ATO, ensure that the reply is in writing, as they do not guarantee any verbal replies that they make.

Out of curiosity, what are the buying and selling costs over there ? Stamp duty etc ?

MrsDagboy

Actually thats true, I had forgotten that, it does depend on when you become a resident in Oz for tax purposes, so the scenario may not be so bad.

Alan Collett

Note that CGT in Australia is measured with reference to the value of the asset on the day you become tax resident in Australia ...

Best regards.

Bix

Glad not to dissappoint
It's not all my own work though; I have help from these:

glhall

Thanks for everyones help. Ill get it in writing from ATO.

We are trying to sell privately ie no real estate agents. If we sell that way it will cost me $600 for the lawyer to do a sale & purchase agreement. Thats it. No CGT, No stamp duty. Sometimes its good to get a valuation done as well & that will cost another $400 approx. If we sell through real estate they will charge $400 plus about 3.5 - 4% of selling price as commission.

If wer'e buying theres only the cost of solicitor to check the purchase contract and a property information memorandum(not compulsory but advisable if you know nothing about the property) from the Council at about $300. If you need a mortgage the bank will ask for a valuation at your cost. Also allow $500 bank fee to set up mortgage.

Alot of people over here are buying/building houses once or twice a year & making alot of money without paying tax on it. You might get away with it once a year but anymore and you're liable to get caught. You can also make money by buying a bare block and moving a 2nd hand house on and doing it up. I had a decent sized house offered to me the other day for $20,000. I could buy a 9acre block for say 170,000 about 10 minutes out of hamilton, move a house on for say 100,000 all up and have a cheap place for 270,000. Lots of people are still doing it over here.

Graham

Kiwipaul

If you don't sell your NZ house after you move across to Oz, so long as you don't buy in Oz (just rent) I believe you can claim the NZ house as your primary residence for up to 6 years even if it's rented and so free of CGT in Oz.

That is the case of a Oz house which you move out of and I believe the same should apply to your NZ house.

Also so long as you keep the house for 12 months from the time you become resident in Oz half the Capital Gain is tax free. So the tax on the gain would be approx 24% even if you are on the top rate in Oz.

MrsDagboy

I think those are the same ones that Dagboy takes .

Graham, sorry I left out the most important detail about becoming a tax resident! In our case, we actually made a capital loss on our sale in the UK as we dropped the price of the house GBP15,000 in the 18 months it took to sell it while we were over here. That, plus the fact that it wasnt rented but was still costing us money ie interest on mortgage etc, meant that we ended up with a quite large capital loss to carry over.