How can I get around 40% tax
#1
How can I get around 40% tax
Like a lot of other people we have decided to rent our house and wait for the market to improve in the UK. So is there any way around not paying the 40% tax when we do sell our house and transfer the money to Oz
#2
Bitter and twisted
Joined: Dec 2003
Location: Upmarket
Posts: 17,503
Re: How can I get around 40% tax
you would be liable for CGT if you own two homes and sell one of them
#4
BE Enthusiast
Joined: Nov 2006
Location: Camberwell, Melbourne, Australia
Posts: 781
Re: How can I get around 40% tax
You have 1 house in the UK and thus any debt etc is to the UK government. Ditto for Aus.
Nothing to worry about...
#5
Bitter and twisted
Joined: Dec 2003
Location: Upmarket
Posts: 17,503
Re: How can I get around 40% tax
The ATO tax you on your worldwide income including capital gains.
#7
Devil's Advocate
Joined: Feb 2008
Location: Mandurah
Posts: 2,269
Re: How can I get around 40% tax
If you were not to rent it you may have an argument and claim the you have abridging loan between your two principle residences. But as I understand it if you rent it, then is becomes liable.
Aud and Uk have reciprocal tax agreements so the fact one house in one country and the other elsewhere is irrelevant. Under Aus tax law even Swiss abank accounts should be declared!
As always get proper finanical advice.
#9
BE Enthusiast
Joined: Nov 2004
Location: Murrumbeena, Melbourne
Posts: 380
Re: How can I get around 40% tax
Thats not correct, Oz & UK have a double counting tax arrangement so if you pay tax in the UK this is deducted from any tax liability in Australia.
You will be liable for capital gains tax although in the UK if is has been your primary residence you have up to a year after you move out of the property to sell it before CGT becomes liable.
Need to check the australian details but you will be liable for all capital gains.
#10
BE Forum Addict
Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,362
Re: How can I get around 40% tax
To the OP - you may have liabilities in either or both the UK or Australia to income tax on rental profits and capital gains tax on any gains made when you sell but there are quite a few reliefs available and the chances are that any tax you pay will be way less than 40% anyway.
#11
BE Forum Addict
Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,362
Re: How can I get around 40% tax
Also there are further reliefs from UK CGT available if you rent out a property that used to be your home. And the rate of UK CGT is now 18%.
#12
Guest
Posts: n/a
Re: How can I get around 40% tax
Assume you have a property in the UK valued at £100k, and £20k in the bank.
You move over when the exchange rate is say 2.4 to the £, therefore you are worth $288,000.
Assume you bring your funds over 3 months later and the exchange rate at the time is 2.45 to the £.
You bring £120k x 2.45 = $294,000.
Your worth has increased by ($294k - $288k =) $6,000 and this is the figure that is taxable as part of your income for the relevant tax year. If the value of the house had gone up or down it would affect the taxable figure accordingly
You move over when the exchange rate is say 2.4 to the £, therefore you are worth $288,000.
Assume you bring your funds over 3 months later and the exchange rate at the time is 2.45 to the £.
You bring £120k x 2.45 = $294,000.
Your worth has increased by ($294k - $288k =) $6,000 and this is the figure that is taxable as part of your income for the relevant tax year. If the value of the house had gone up or down it would affect the taxable figure accordingly
In many cases, the above figure could be trimmed even further.
#13
BE Enthusiast
Joined: Jan 2007
Location: Perth, WA
Posts: 365
Re: How can I get around 40% tax
IF any tax is payable, it would only be on any PROFIT you had made since moving to Australia, NOT on the entire sum.
If you have had the asset for over 12 months, the above capital gain is also halved, and taxed at your normal tax rate.
In many cases, the above figure could be trimmed even further.
If you have had the asset for over 12 months, the above capital gain is also halved, and taxed at your normal tax rate.
In many cases, the above figure could be trimmed even further.