gozzey

Hi, we currently have a house rented out in the UK and have been living in Australia for 6 years, waiting and waiting for the house prices to go up and exchange rate to improve. We have now got to the point that we just want to sell up and buy over here as nothing seems to be changing.

Can anyone tell me would we be liable to pay any tax etc on any equity we bring over because we have left it so long from moving over to selling. And also if we were to buy a piece of land before actually selling the UK property, would this cause complications once the property was sold. Is it best to wait until we have the equity in our hands before putting a deposit on any land.

Thanks in advance.

old.sparkles

I think that you may be liable for Capital Gains in the UK as it hasn't been your main home for so long. Have you been filing tax returns for the last 6 years?

gozzey

Yes we have been filling in the relevant tax forms, and we have never bought here so technically it is still our main home from our point of view.

old.sparkles

I'm not an accountant or a tax specialist, but I thought that if you were renting out a house that used to be your main home, then you were allowed 3 years or something to sell without incurring CGT. Hopefully someone else will know. My only experience was selling a house I rented out when I moved within the UK and can't remember the exact info - just that I had to complete a CGT form but I rented for just over 6 years.

Chortlepuss

Get professional advice on this one. You will be liable to Australia tax but the period where capital gains tax covers is confusing. UK allows you a few years after living in it. If CTG applies then it may be your house hasn't gained much in value. You'll need a professional evaluation of value on moving to Oz and value now. Please keep me posted as I'm in a similar situation - although 95% sure I want to return to UK!

Buzzy--Bee

It's 6 years if you turn your PPOR into an IP, which seems to have been the case here. That's the case with Australian property anyway, I assume it is the same for overseas property.

BB

Bermudashorts

If they only own one property, which seems to be the case here, then it certainly is their main property. It has to be because there is no other. So no CGT implications. I wouldn't buy before you sell though.

koalakim

I remember something about 6 years being a marker about selling the UK property. I do know that if you buy anything in Oz before selling the UK property then you will be liable for CGT, so if you intend selling it soon don't buy anything here!

old.sparkles

Found this on claiming Private Residence Relief when you sell your house - http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm which seems pretty easy to follow (I think this was what I used when I completed the form when I sold my house)

Bermudashorts

Actually there is no question of there being an UK CGT, it does not apply to non-residents (after 5 years of non residency). It is Australian CGT that is the question, but I don't think there is any.

old.sparkles

Oh - okay. I assumed that because there was a UK income, they would be liable for UK CGT as well. Thanks BS

gozzey

Thank you for your advice everyone. I will have a look at the info given. Unfortunately the houses were at their peak when we left the uk so the value now is a lot less than then and the rent we receive only covers the outgoings, so would hate to have to pay CG,s tax on something we have lost money on.

Buzzy--Bee

CG usually only applies when a gain is made, not a loss....

BB

Bermudashorts

Well then this is all a moot conversation anyway.

Kiwipaul

You won't be liable for CGT in Oz as you can rent your PPOR out for 6 years before it becomes an issue.
Remember the CGT if you were liable would be based on the value of the property when you arrived in Oz (worked out using the exchange rate on the date you arrived) in Oz$ and the difference in value of the property when you sold it in Oz$ on the date you sold it.
If this proves to be a loss you can keep the loss for use against any capital gain you make in the future.