spouse of scouse

I'm thinking of keeping two UK rental properties when I move back to Oz at the end of this year. I'd probably sell these some time down the track.

The properties are owned jointly by myself (Australian citizen) and my husband (dual UK/Australian citizen), and we will both be Australian tax residents from the date of our return.

From my (at this stage very limited) understanding of CGT for people in our situation, the actual capital gain (or loss!) will be the difference between the value of the properties at the time I move back to Oz, and the price I sell the properties for. Is that correct, or is the capital gain in Australia calculated the same as it would be if I stayed in the UK, ie the difference between what the properties were purchased and sold for? Bearing in mind that they are purely rentals and we have never lived in them so there won't be any private residence relief.

Would it be wise to get a professional valuation of the properties done prior to leaving the UK?

I'll be consulting a dual UK/Australian tax adviser at some stage before we leave the UK, but I'd like to have at least a basic knowledge myself before I do that. I'll also need to delve into the dual taxation agreement between the two countries.

This changing countries lark is hard work isn't it?

Beoz

Ho ho ho. Welcome to the world of ping pong.

Everything you say seems about right on the tax front from my limited knowledge. Expert required for sure.

the troubadour

It is hard work and less incentive every year. As from last year in Australia, can no longer claim tax deductions on viewing investment property. A bit of a blow. Besides that all rental income must be declared of course. Although pay in country where property is located, not UK, still must declare it here. All foreign banks are now obliged to send yearly statements of earnings or monies moved into accounts and yes I believe you are correct with capital gain, although complicated in my situation to give advice. You really must deal with a tax accountant fully versed in the area. I made a few mistakes in early days that cost plenty.

louie

Don't forget that you will also be subject to UK capital gains tax on any gain. Not only that, unlike sales by UK residents, you have to submit the relevant return within 30 days of exchange and (unless you are already within the self-assessment system, which I expect you are) pay any CGT. See more here. Late filing penalties have been being issued like confetti by HMRC even though hardly any non-residents will know about this as it only changed in 2015.

Not an expert in Australian tax, but I think you are correct. One point of clarification just in case though - the relevant amounts are the A$ equivalents at the time. So if you move back when the property is valued at £200k when the exchange rate is £1 = A$1.6 (=A$320k) and sell for £180k when the exchange rate is £1 = A$2, you will have made a £20k loss but a A$40k gain.

spouse of scouse

Thanks Louie, I didn't know about the 30 day rule. Yes, we need to file our first self assessments after 5 April this year, our rental income only commenced in the 2017/2018 UK tax year (previously living on savings, so haven't had to do one before).

Although I was fine doing my Oz tax returns, I've engaged a UK tax adviser to give me hand for this first self assessment and then I can hopefully do them myself from Australia.

If the adviser's across the UK/Oz dual taxation agreement I'll get them to help when I sell the rentals too - I suppose any CGT will need to be apportioned between the UK (for any capital gain between the time the properties were purchased and the time I left the country permanently), with any capital gain between my return to Oz and selling the properties subject to CGT by the ATO. I fear my head will have exploded by then

Alan Collett

I suppose any CGT will need to be apportioned between the UK (for any capital gain between the time the properties were purchased and the time I left the country permanently) ...

=> Not so - sorry! When you dispose of a UK residential property as a non resident the reference point for UK CGT purposes is likely to be the value of the property on 6th April 2015.

Remember that income tax and UK inheritance tax are planning issues too.

Best regards.

Dreamy

I really need to keep up with this forum better!!

(sorry, no help on your predicament though x )

Dentonburn