I have just sold my house in the UK, and I need to account for it in my tax return. I'm told that I have to work out the CGT based on the market value from when I became tax resident. I bought the house in 1997, but became tax resident in 2010, how the hell do I get a value now for the taxman?

Hi, first of all are you sure that you are liable for CGT? There are certain rules and regulations if this was your main residence. If it was an investment property then you would be liable for CGT.

That said, we got a firm of valuers to go to the house and give us a valuation of what the property would be worth at the time we became residents. You can find a qualified surveyor here:

Find a Surveyor – RICS official directory of surveyors

They may still be able to give you a value even if they can't access the house, if you can give them all the property details, based on what similar properties were sold for at the time.

Another point to bear in mind is that you need to work out the base value in Oz dollars, based on the official ATO exchange rate at the time when you became a resident in Oz. You can find these on the ATO website.
And don't forget to take off your discount.

Thanks for that - unfortunately I'm liable. I got caught out because I didn't sell it before I signed the contract on a house here.

So if possible it's best to sell any foreign property (even if it's your home) before signing a contract on a place in Oz? Or holding off with the sale until you cease to be a resident?

Take some tax advice, that doesn't sound right to me. Based on that sentence alone that is, which suggests you were just caught out with timing, or did you have the two houses for a prolonged period of time.

I have taken advice - the timing is the only thing here, I signed contracts, the building has started and a month later I sold the UK house, my tax guy says I can not claim the UK house a s aprincipal residence any longer despite it being inside the 6 years and despite me not moving into the new house yet.

I will get a second opinion though :-) he may be wrong.

So i went to the accountant in our company, and apparently the first accountant is spot on, I am eligible for CGT. You are allowed overlap, but not if you were renting the old one out.

From the horses mouth -

If you acquire a new home before you dispose of your old one, you can generally treat both dwellings as your main residence for up to six months if:

you lived in your old home and it was your main residence for a continuous period of at least three months in the 12 months before you disposed of it
you did not use it to produce assessable income (such as rent) in any part of that last 12 months when it was not your main residence, and
the new dwelling becomes your main residence.

The overlap period ends at the earlier of six months and when settlement occurs on the contract to sell your old home

I would get a third opinion. It still does weird to me.

You cannot have two principal residents of course, but a one month overlap does not mean that you cannot count the other residence as your main one for the previous four years. I would have thought, at most, that you have to pay CGT on any appreciation in the last month when you had two properties.

Just choose your UK property as your main residence.

https://www.ato.gov.au/General/Prope...tal-gains-tax/

Is the new house complete? have you received your occupancy permit yet?


S

I agree with Bermudashorts that the advice you have been given sounds a bit odd.

Earlier this year, when we were thinking of selling our house in the UK, we got CGT advice from Go Matilda Tax and Accounting Solutions for Individuals and Businesses in UK and Australia who provided clear, thorough advice at a very reasonable cost. As I recall there was a long period of time during which we could have two properties and not incur CGT, but I don't have the details to hand.

As you can see from my location, we did not sell the house, but moved back into it and sold the house in Oz instead!

I think you are getting bad advise as well, claim your UK property as your PPOR until you sold it and then their is no CGT liability (in Oz).
Then claim your Oz house as your PPOR from this date so then your only CGT liability is from the contract date on your new house to the contract date you sold your UK house. The CGT on the 1 month overlap will be negligible to zero.

Others have asked whether or not you are liable for Australian tax. Perhaps seek professional assistance to understand further.

It's self assessment, so you have to declare your own value and the ATO may (or may not) dispute it. Only if they challenge the valuation does it ever become an issue.

You could, for example, look at an index of house prices in the region and apply that to the sale value to get a notional value for 2010. Or look at sale prices of comparable properties back in 2010.

Also - you need to take the value in 2010, convert to A$, and then compare to the A$ value of the sale price. This may increase (or reduce) your gain in A$ terms.

Finally, since you have been outside the U.K. for less than 5 years, there may be a U.K. capital gains tax liability to consider. Especially if you return to the U.K. before 5 years. Recommended to research further on the HMRC website.

Hi James.

In case of need: Tax and Accounting Solutions for Individuals and Businesses in UK and Australia

I will be available for a meeting in Sydney on Thursday this coming week, if you want to discuss in person.

Best regards.