tricky nick

We were told if you sell your house, in the UK, before entering Australia, you don't pay tax on the amount.
If you sell your house in the UK after entering Australia you pay tax on the amount as it is classed as earnings.
Do the tax implications apply after your visa has been granted or after validation?

We would be grateful for any advice regarding taxes.

Cheers

Phoenixuk2oz

==========================================

This is a valid point Tn. Thanks

I don't know the answer to yr question though I'm afraid

What I do know is I rang bank to deposit lge sum of money from BS to Bank. Was asked pretty searching questions [was done covertley /underhandedly!]. Now I know why

Either that or they thought I was big drug dealer/bank robber etc:scared: .....LOL

I will consider this point;do more homework;this may highlight to anyone else who wants to transfer lge amount of dosh to Oz may need to do same Thanx.

Phoenixuk2oz

Bix

PUK,
Do not turn to a life of crime. You sound such a lovely person so I would hate for you to get in trouble

Phoenixuk2oz

Me's always gettin into trouble Bix

Me & you both

For instance........we're hijaking this thread with our naughty antics again mate :scared:

Now stick to the question and stop following me round

Or is me following you

Phoenixuk2oz

Bix

But we are keeping it at the top so someone who knows the answer can find it easy and leave an educated reply

Phoenixuk2oz

Good answer [right answer]

Puk2oz

gazza321

I think that you have got 6 months after your Entry to Australia to sell your house and transfer any money before you have to pay any oz tax.

Cheers

Gazza

Vegemite Kids

Yep, that what I was told at the embassy in Berlin when I asked very similar question.

PaulDClark

I can't see that selling your house will be earnings. Potentially a capital gain, based on the value at the time you became an Aus tax resident, and on currency flucuations, but thats all.

Hyopethically, you have a house with equity worth 100K at 2.4 dollars to the pound.

Value = 240KAUD

If after a few months you sell and the value is 105K at 2.5 dollars to the pound:

Value = 262.5KAUD

Increase = 262.5 - 240 = 22.5KAUD which would be liable for capital gains.

Tax only applies when you become a tax resident. This is definitely not at visa grant. Allen Collet has loads of stuff on this at the GoMatilda website.

This is my understanding of the situation, I'm not a tax expert by any strech of the imagination. I will be interested in the six month rule if true, as I have a company to close down and want to take the assets as a capital disbursement permissable under the UK tax situation.

ABCDiamond

Spot on, Paul.
It's only the gain that is taxable.

I did hear about one person who got a friendly estate agent to do a letter saying what his property was worth at the time of his moving. And they inflated it !! tut tut.
So when he sold, he didnt make a profit on any gain since the date of moving.

Kiwipaul

I agree with the others it's only the gain that might be liable for tax, NOT the whole value of the house.

Also I'm not sure that they will ask you for documentary proof of the value, because on the tax return you just have to state the total capital gains for that year, and they don't ask for a breakdown.

The only time they would ask for a breakdown is if they think you are lying and audit you. Then a letter from a friendly estate agent won't do you any good at all as they will ask for a registered valuation to be done.

Also something I saw somewhere said that if you only rent in Oz you can claim your residence in UK as still your main place of residence and free of CGT untill you buy here and then you have to choose which you want to keep as your main residence for tax purposes. NOT too sure about this but I know I read it somewhere but don't have a link.

PaulDClark

It would be nice if this could be confirmed

ABCDiamond

This is from ATO

It explains where the 6 months rule comes into effect, now to find confirmation about the bit about keeping the UK property as manin residence !!

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

the old dwelling 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 in any part of that 12 months when it was not your main residence, and
the new dwelling becomes your main residence.
If you dispose of the old dwelling within six months of acquiring the new one, both dwellings are exempt for the whole period between when you acquire the new one and dispose of the old one.

ABCDiamond

I found something about it, I think, but it looks complicated, so I have just copied the bottom line of the arcticle......



phone the Personal Tax Infoline on 13 28 61 (from inside OZ only)

sjn2003

From my (as an accountant) understanding of the tax situation what you have written above is exactly right. I also do not see any problem with keeping a UK residence as your main home and outside capital gains tax as long as you do not rent it out and if you buy an Oz home then you have to elect which one is your main residence.

The tax position in Oz is very similar to the UK.

And yes, you are taxed on the gain ie sales value less cost. But if it is your home there is no tax (as said above). The bit about only being taxed on the gain from when you entered Oz is not relevant unless the property is rented and if that is the case the rest of the gain is going to be taxable in the UK - so you will get taxed on the whole of the gain somewhere in the world.:lecture: