iainandsam

We rent out our house in UK and wondered if we buy in Australia are we liable for capital gains tax on our UK house when we sell it. Does it depend on how long we rent it out for? If so what is the time limit, thanks in advance

JAJ

You may be liable to capital gains tax - look at http://www.ato.gov.au with specific reference to the rules for main residence.

Bear in mind that the cost base is the value when you became tax resident, and that (when translated to Australian dollars) may be more than what you could sell for now. In that case, you would have a capital loss.

You also need to investigate if any UK Capital Gains Tax may be payable.

kar-kier

Stupid question, but how would Australia know that you sold your house?

We are in the same postion, hoping to sell the house later this year - I just figured we'd pocket the full amount!

BAY

If you bring in more than $10,000 to Australia the ATO (Australian Tax Office)will be notified !

kar-kier

How about if i brought it in, in dribs and drabs . . .

Pollyana

Then I wouldn't be shouting about it on a public forum.....

BAY

Yes you could bring it in dribs and drabs ... but how long would that take ... and could you be sure that your bank where you would deposit the money wouldn't become suspicious and report it to the ATO ?

It depends if you want to take the chance of getting caught and suffer the consequencies of a heffty fine / imprisionment and being chucked out of Australia with a criminal record

Burbage

Are you really going to make a capital gain in the Uk housing market?

kar-kier

Good point! I'll be lucky if we make $10000!

BAY

The capital gain will only be on the difference between the value of the house when you moved to Australia and when you sold the house, so in today's UK housing market it wouldn't amount to much

iainandsam

But how do they know how much is was worth then and now? We had estate agents out at the time but nothing to prove the estimate. Also the original question was about how it will affect us if we buy here in Australia as its a second property would we be liable for tax? Thank you for your help

JAJ

They don't know! Tax is based on self-assessment, only if you get audited will there ever be scope for your estimate to be challenged. And as long as you have some reasonable evidence to support that estimate, you should be ok.

You really need to spend time on the ATO website ...

BAY

If you buy a property in Australia then your UK property becomes your 2nd home and you are therefore liable for CGT. How the UK tax people know whether you have a property in another country I don't know . They probably wouldn't and therefore you wouldn't pay the tax in UK, however, the ATO would know and therefore you would pay CGT in Oz. Thats my take on it ... but I don't claim to be an expert on it.

edman

Under UK tax laws you can keep your home when you move to a new one (regardless of where) and rent it for an additional 2 years and then sell it with no CGT. No tax will be due if you keep to that otherwise is would be up to you to inform the tax office as they really dont keep track on private individuals.

Additionally as Aus and UK have an agreement on matters of taxation so you cant be taxed twice (once in each counrty) and also on matters thant do not attract tax in UK on sale.

Hope thats helps

BAY

'Additionally as Aus and UK have an agreement on matters of taxation so you cant be taxed twice' ... not as simple as that, again from my limited understanding, if you get taxed in the UK for say CGT you get a tax credit for it which may then be deducted from the CGT you pay in Oz. So if the Oz CGT is greater than the UK CGT you pay the difference to the ATO. So its not a case of I've paid some UK CGT therefore I don't need to pay OZ CGT. PLease correct me if I'm wrong.