dor34

Hi,

We have our visas and plan to move to Oz by the end of the year. We plan to rent our house out here in Ireland for the first year or so and rent in Oz. I believe that if we sold our house here and then moved to Oz we would not have to pay tax on what we make from the sale. Does anyone know what the situation would be if we sold a year or 2 after moving, would we then have to pay tax on our money? Any information on this would be appreciated. Thanks.

Dor

Simba

You have to declare your world wide assets on your tax return so I think you would have to pay tax on any gains when you sold it.

Chris&Jaime

I hope someone out there has the answers because I was wondering the same thing! The way the house prices and exchange rates are at the moment, we could lose a lot of money by selling up and taking the money now!

Wendy&Mike

If you get an elevated valuation now and then sell in a few months you could offset any Forex gains that you make on the sale. Go with the most expensive estate agent and get a written valuation at the highest price you can. Then sell at a realistic price. You can then demonstrate that you have actually made a loss.

Mike.

dor34

Hi,

Thanks for the replies. Well, I just got off the phone with the tax office and as usual can't get a straight answer. If we sell the house before we go to Oz we don't have to pay tax on what we make. If we move to Oz and rent out our house here we have a year to sell it and not pay tax (I think) We will have to pay tax on rental income. If we move and sell it after the year we may have to pay tax. As it's our primary residence the tax we have to pay depends on how long we lived here and how long we have rented it out, we might even get away with paying tax because it is our home. The guy in the tax office recommended that we get an accountant to advise us. It's all very complicated and the thoughts of having to come back in a year or 2 to sell it is making me think twice about keeping it. As much as I really want to make a go of living in Oz and hope we fall in love with it,I feel that psychologically keeping the house here will help me settle in Oz (it's hard to explain but it does!) I know some people do not agree with this and think that we should just sell up if we are to be commited to a new life in Oz but for us the best thing to do would be to keep it (well it was until a while ago) Sorry to waffle on but that's what I have found out. Bear in mind I'm in Ireland, so don't know how it is in UK, probably similar. Good luck to you all whatever you decide, I'm even more confused now.

Dor X

renth

The key factor is whether or not you purchase a house in Australia before selling your Irish house.

If you own a house in Ireland and rent in Aus your Irish house remains your primary residence for (I think 5 or 6 years, you'd need to check).

This means you can rent in Aus for 5 or 6 years before selling Irish house with no capital gains tax to pay. You'll need to declare the rental income to the Aussie tax man, natch.

As soon as you buy an Aussie house it becomes your primary residence then you have to pay CGT on selling the Irish house. Don't ask me when the tax is calculated from (when you moved, when you bought in Aus) because I don't know.

MartinLuther

It looks like the CGT on renting and then selling your own home is similar to the UK except that you get 12 months instead of 3 years after you move out. What does this mean? It means that for CGT calculations you treat the last year as if you lived there (even though you didn't) and then calculate the ratio of rental years to lived there years.

For example: if you live in the house for 10 years and rent it for 2 then you are liable for CGT on 1/12th of the gain. Remember you can reduce the gain with capital improvements and you also get a CGT allowance (approx €1300 each). So say you made €100k then 1/12th is 8333 less your allowance of 2600 (assuming joint ownership) leaves 5733 times 20% equals €1146 to pay.

As renth said if you rent in Aus then the home in Ireland is treated as your primary residence and you have 6 years (or until you buy in Aus) before there is any CGT implications.

It looks like Ireland likes to hand onto you (i.e. treats you as ordinarily resident for tax purposes) for 3 years after you leave. Which I believe means that you would be no longer subject to Irish CGT after 3 years.

As for rental income. You may have to pay some tax to Ireland and some to Aus if you make a profit. The double taxation agreement means that although you may pay money to both tax offices you're not actually taxed twice.

Stands back and waits for corrections

briwi

Not sure on the years thing, but according to my accountant you only have to pay CGT on any profit made on the value of the house when you left (or, if the year thing is true, I assume when it stops being your primary residence) - so yes, you need a valuation BUT I was told the Australian tax office will not take an estate agents valuation, it has to be done by an independent, accredited valuer.