Return to UK but CGT
Jul 3rd 2018, 12:50 pm
#16
I still dont believe it..
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,777
Re: Return to UK but CGT
The important question is did you buy or rent a property whilst in Oz.
If you rented then you can claim your UK property as your PPOR for 6 years after you move out.
But if you bought another property in OZ then yes you are liable for the CGT on the increase on your UK property. But you will be selling your Oz property with no CGT liability which will soften the blow.
If you rented then you can claim your UK property as your PPOR for 6 years after you move out.
But if you bought another property in OZ then yes you are liable for the CGT on the increase on your UK property. But you will be selling your Oz property with no CGT liability which will soften the blow.
https://www.gov.uk/tax-live-abroad-sell-uk-home
Jul 3rd 2018, 12:54 pm
#17
I still dont believe it..
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,777
Re: Return to UK but CGT
Remember always - you are dealing with 3 seperate things - what the oz govt wants to charge you, what the uk govt wants to charge you, and does the treaty explicitly allow you to claim exemption frim the country you arent taxed in in this circumstance. Complicated by - you coukd choose to sell before or after moving - does that impact the result?
i tell you, its a lot easier when your country doesnt do cgt or iht for that matter.
i tell you, its a lot easier when your country doesnt do cgt or iht for that matter.
Jul 3rd 2018, 11:30 pm
#18
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Return to UK but CGT
Thats not what the uk gov website says - it says if you are taxed abroad you pay cgt unless you stay in the uk 3 months min in the tax year, first and last years are a little different but nicely - only applies since 2015?. Anyway, take advice from a uk tax lawyer not here... You really dont want to raise your head above the parapet with hmrc and get them into pencil sharpening/investigation mode, and rhere may well be avoidance available, keep it all simple as you can. Have you calculated the gain yet?
https://www.gov.uk/tax-live-abroad-sell-uk-home
Best regards.
Jul 4th 2018, 11:08 am
#19
BE Forum Addict
Joined: Jan 2003
Location: Brisbane
Posts: 1,576
Re: Return to UK but CGT
My advise is based on purely his situation in OZ and Oz tax laws.
Jul 5th 2018, 1:02 am
#20
Forum Regular
Thread Starter
Joined: Dec 2010
Posts: 33
Re: Return to UK but CGT
Jesus Wept! I could kill my accountant.
He had me believing that I'd have a massive bill on my return to the UK.
Here is how to work it out.
On the day you become a permanent resident - the value of your house in UK is X (convert to AUD using that days exchange rate)
On the day you stop being a resident in Australia for tax reasons - the value of the house is Y (again convert to AUD)
Are you up or down?
If you are down (if your property has decreased in price) you will have a credit applied to your CGT which can be applied to future CGT events in Australia.
If you are up (if your property has increased in price) then it means WHEN/IF YOU EVENTUALLY SELL THE HOUSE you will have to pay CGT. If you never sell the house you will never have to pay the CGT. My accountant never told me this bit - I could kill him!!!
I think I might actually be down due to the exchange rate. (it was much higher than now).
He had me believing that I'd have a massive bill on my return to the UK.
Here is how to work it out.
On the day you become a permanent resident - the value of your house in UK is X (convert to AUD using that days exchange rate)
On the day you stop being a resident in Australia for tax reasons - the value of the house is Y (again convert to AUD)
Are you up or down?
If you are down (if your property has decreased in price) you will have a credit applied to your CGT which can be applied to future CGT events in Australia.
If you are up (if your property has increased in price) then it means WHEN/IF YOU EVENTUALLY SELL THE HOUSE you will have to pay CGT. If you never sell the house you will never have to pay the CGT. My accountant never told me this bit - I could kill him!!!
I think I might actually be down due to the exchange rate. (it was much higher than now).
Jul 5th 2018, 1:15 am
#21
Forum Regular
Thread Starter
Joined: Dec 2010
Posts: 33
Re: Return to UK but CGT
Oh - I did not buy a house while I was in Australia - I rented all that time.
Jul 5th 2018, 5:18 am
#22
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Return to UK but CGT
Jesus Wept! I could kill my accountant.
He had me believing that I'd have a massive bill on my return to the UK.
Here is how to work it out.
On the day you become a permanent resident - the value of your house in UK is X (convert to AUD using that days exchange rate)
On the day you stop being a resident in Australia for tax reasons - the value of the house is Y (again convert to AUD)
Are you up or down?
If you are down (if your property has decreased in price) you will have a credit applied to your CGT which can be applied to future CGT events in Australia.
If you are up (if your property has increased in price) then it means WHEN/IF YOU EVENTUALLY SELL THE HOUSE you will have to pay CGT. If you never sell the house you will never have to pay the CGT. My accountant never told me this bit - I could kill him!!!
I think I might actually be down due to the exchange rate. (it was much higher than now).
He had me believing that I'd have a massive bill on my return to the UK.
Here is how to work it out.
On the day you become a permanent resident - the value of your house in UK is X (convert to AUD using that days exchange rate)
On the day you stop being a resident in Australia for tax reasons - the value of the house is Y (again convert to AUD)
Are you up or down?
If you are down (if your property has decreased in price) you will have a credit applied to your CGT which can be applied to future CGT events in Australia.
If you are up (if your property has increased in price) then it means WHEN/IF YOU EVENTUALLY SELL THE HOUSE you will have to pay CGT. If you never sell the house you will never have to pay the CGT. My accountant never told me this bit - I could kill him!!!
I think I might actually be down due to the exchange rate. (it was much higher than now).
If you have a choice as to when to sell it is usually best to know the position in the UK and Australia if you sell when resident in Australia/not resident in the UK, as against the position in the UK and Australia if you sell when not resident in Australia/resident in the UK.
This also requires a consideration of the applicable Treaty provisions.
Best regards.
Jul 5th 2018, 7:10 am
#23
BE Forum Addict
Joined: Jan 2003
Location: Brisbane
Posts: 1,576
Re: Return to UK but CGT
Must admit I don't know whether you can claim this PPOR exclusion for a foreign property but I don't see why not. CHECK.
Yes I agree that once you cease to be tax resident in Oz you have a CGT liability on all your income generating assets, but you can defer this liability until you sell the asset and once you've left Oz they won't know when and for how much you sell it. This is only cost effective if you don't plan on returning to Oz and becoming a tax resident again.
Again this only applies to Oz tax NOT UK tax so get professional advise.
Jul 5th 2018, 7:49 am
#24
I still dont believe it..
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,777
Re: Return to UK but CGT
Well if that is the case you can claim your UK property as your PPOR whilst it was rented for up to 6 years after you moved out so if you were away for 7 years your Oz CGT liability will only be for the last year.
Must admit I don't know whether you can claim this PPOR exclusion for a foreign property but I don't see why not. CHECK.
Yes I agree that once you cease to be tax resident in Oz you have a CGT liability on all your income generating assets, but you can defer this liability until you sell the asset and once you've left Oz they won't know when and for how much you sell it. This is only cost effective if you don't plan on returning to Oz and becoming a tax resident again.
Again this only applies to Oz tax NOT UK tax so get professional advise.
Must admit I don't know whether you can claim this PPOR exclusion for a foreign property but I don't see why not. CHECK.
Yes I agree that once you cease to be tax resident in Oz you have a CGT liability on all your income generating assets, but you can defer this liability until you sell the asset and once you've left Oz they won't know when and for how much you sell it. This is only cost effective if you don't plan on returning to Oz and becoming a tax resident again.
Again this only applies to Oz tax NOT UK tax so get professional advise.
Jul 5th 2018, 10:45 am
#25
BE Forum Addict
Joined: Jan 2003
Location: Brisbane
Posts: 1,576
Re: Return to UK but CGT
Not to familiar with UK CGT after being away for 30 years, but does moving back into an investment property result in a CGT liability immediately or is it deferred until you actually sell it (most likely).
Jul 5th 2018, 10:54 am
#26
I still dont believe it..
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,777
Re: Return to UK but CGT
The legal liability has already occurred after you moved out, (though possibly not till 2015 or possibly not till the year after you moved out which would be the case if you were in the uk, so I’m dubious about 2015) but take advice.. However the tax doesn’t have to be paid till the gain is crystallised when you sell, BUT make sure you know what the liability is, it depends on theoretical values year by year, and chances are it’s 28% (18%. if you fall into low band tax but that’s unlikely in cgt world) of the growth.
Last edited by uk_grenada; Jul 5th 2018 at 10:57 am.
Jul 5th 2018, 11:00 am
#27
I still dont believe it..
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,777
Re: Return to UK but CGT
The legal liability has already occurred after you moved out, (though possibly not till 2015 or possibly not till the year after you moved out which would be the case if you were in the uk, so I’m dubious about 2015) but take advice.. However the tax doesn’t have to be paid till the gain is crystallised when you sell, BUT make sure you know what the liability is, it depends on theoretical values year by year, and chances are it’s 28% (18%. if you fall into low band tax but that’s unlikely in cgt world) of the growth.
Jul 5th 2018, 9:58 pm
#28
BE Enthusiast
Joined: Feb 2008
Posts: 457
Re: Return to UK but CGT
Interesting thread. We are long term temporary residents in Australia and rent out investment properties in UK. We are British. We are aware of the new rules, and had our properties valued, realise we will pay tax on the potential increase in value when we sell, but should we ever move back and live in one as our now principle home would we be in the same position as we did buy a house here? Or as we never became properly resident here, eg not PR, pay all our tax in UK would different rules apply.
Jul 5th 2018, 11:15 pm
#29
BE Forum Addict
Joined: Jan 2003
Location: Brisbane
Posts: 1,576
Re: Return to UK but CGT
I found this regarding UK CGT
To work out how much of the gain you’ll have to pay tax on, you add the number of months you lived in the property to 18 and divide by the number of months you owned the property. This gives you the fraction of the gain that is tax-free. The amount you’ll pay tax on is the remainder of the gain minus your annual CGT exempt amount of £11,000 (assuming you have no other gains to set it against).Because you let the property, you may also be able to qualify for what’s called “lettings relief” which makes up to £40,000 of your taxable gain tax-free. But if the tax-free gain as a result of private residence relief (calculated above) is less than £40,000, the most you can claim in total is double the private residence relief.
https://www.theguardian.com/money/20...n-let-property
It's from 2014 so not sure how relevant to current tax rules it is.
To work out how much of the gain you’ll have to pay tax on, you add the number of months you lived in the property to 18 and divide by the number of months you owned the property. This gives you the fraction of the gain that is tax-free. The amount you’ll pay tax on is the remainder of the gain minus your annual CGT exempt amount of £11,000 (assuming you have no other gains to set it against).Because you let the property, you may also be able to qualify for what’s called “lettings relief” which makes up to £40,000 of your taxable gain tax-free. But if the tax-free gain as a result of private residence relief (calculated above) is less than £40,000, the most you can claim in total is double the private residence relief.
https://www.theguardian.com/money/20...n-let-property
It's from 2014 so not sure how relevant to current tax rules it is.
