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Buying property back in UK as Australian tax resident

Buying property back in UK as Australian tax resident

Old Aug 24th 2022, 3:23 am
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Default Buying property back in UK as Australian tax resident

G'day all! I'm a Brit who's lived in Australia for 16 years and am planning to move to Scotland in 2023. I'm almost 66 years old and officially retired.

My question is, will I be allowed to purchase a house in Scotland while I'm still an Australian resident for tax purposes?

If not, what is the procedure for changing tax residency status?

Thanks so much in advance.
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Old Aug 24th 2022, 4:47 am
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Default Re: Buying property back in UK as Australian tax resident

Hi Claire, welcome to BE.

We (husband and I) purchased a house while still living in Australia, but we bought in England so not overly relevant to buying in Scotland. I can give you a few general pointers but it might be worth your while to consult a tax professional who can advise on your particular situation.

Yes, you can purchase a property in Scotland while living and paying taxes in Australia. There's no procedure to change your tax residency, that's governed by the tax laws of the country you're living in, ie if the ATO has determined that you're a tax resident of Australia you can't change that (unless you leave Australia and have no income from, or assets in, Australia).

See this link for how land and building transaction tax works on property purchases in Scotland. Do note that if you already own a property (anywhere in the world) you'll pay an additional 4% tax on the entire value of the property you purchase in Scotland.
https://www.gov.scot/policies/taxes/...ansaction-tax/

When you're filling in an ATO tax return, you need to declare your worldwide assets and income. If you are receiving an Australian age pension, the value of your Scotland property and any rental income you receive from it (if applicable) may reduce your pension amount.

Once you've moved to Scotland, you won't need to submit a return to the ATO as long as you don't have any income in Australia (including income producing assets). If you do have Australian income or assets I'd again advise that you consult a tax professional, as they'll be able to help you with the Australia/UK double taxation agreement (which stops you paying tax twice on the same income).

I hope that at least gives you a starting point, happy to answer any further questions but I can't promise I'll be able to answer them. My Brit husband and I (Australian) moved to England in 2015, were going to stay forever and purchased two little houses in the north-west with our superannuation to rent out. We then massively complicated our tax lives by moving back to Australia in 2018, while retaining the two rentals and leaving them in the hands of a property management agent. We file both HMRC and ATO returns and after 4 years I think I've finally got a handle on it (just!)












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Old Aug 24th 2022, 4:53 am
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Default Re: Buying property back in UK as Australian tax resident

As you have two threads going on this subject, I'm going to ask the moderators to merge them to save confusion
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Old Aug 24th 2022, 4:55 am
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Default Re: Buying property back in UK as Australian tax resident

Thank you! I tried to edit and ended up duplicating, and I DMd the mods to ask them to delete one, but they are probably sweetly sleeping at this time
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Old Aug 24th 2022, 4:56 am
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Default Re: Buying property back in UK as Australian tax resident

Originally Posted by Claire Crossley
Thank you! I tried to edit and ended up duplicating, and I DMd the mods to ask them to delete one, but they are probably sweetly sleeping at this time
Great, thanks Claire.
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Old Aug 24th 2022, 5:08 am
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Default Re: Buying property back in UK as Australian tax resident

Thanks so much for your comprehensive reply and for the welcome!

My tax affairs will be quite simple, as I'll be selling up everything in Aus. I won't have any Aus income other than potentially from my Aus super fund, if I'm unable for any reason to transfer it to the UK. I haven't tried yet, but it should be completely portable due to my age. I don't get any pensions or benefit payments here in Aus.

I was expecting some form of stamp duty on a home purchase in Scotland, as governments everywhere rarely miss a chance to extract money from you(!) Thank you for that link.

We will miss Australia so much, but it feels like the right time to go "home". I have done the yo-yo thing a couple of times in the past, but this will have to be it now, as I'm too old to keep up the pace 😁
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Old Aug 24th 2022, 5:55 am
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Default Re: Buying property back in UK as Australian tax resident

Originally Posted by Claire Crossley
Thanks so much for your comprehensive reply and for the welcome!

My tax affairs will be quite simple, as I'll be selling up everything in Aus. I won't have any Aus income other than potentially from my Aus super fund, if I'm unable for any reason to transfer it to the UK. I haven't tried yet, but it should be completely portable due to my age. I don't get any pensions or benefit payments here in Aus.

I was expecting some form of stamp duty on a home purchase in Scotland, as governments everywhere rarely miss a chance to extract money from you(!) Thank you for that link.

We will miss Australia so much, but it feels like the right time to go "home". I have done the yo-yo thing a couple of times in the past, but this will have to be it now, as I'm too old to keep up the pace 😁
Hi
Yes, you’ll pay stamp duty on your house purchase.
As far as I can make out, if you already own your primary residence (even if it’s in Australia) when you buy the new place in Scotland, you’ll pay a 4% Additional Dwelling surcharge. I haven’t checked the Scottish rules but - if they’re like the English ones - you‘ll be able to reclaim this money if you sell your primary residence within a certain timeframe.

In England there’s a further 2% surcharge if you buy as a non-UK resident. This can be reclaimed if you spend 183 or more days in the UK in the 12 months immediately after the transaction date.

I can’t see any mention of a surcharge for non-UK residents buying in Scotland - perhaps there isn’t one?

https://www.gov.scot/policies/taxes/...ansaction-tax/

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Old Aug 24th 2022, 6:07 am
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Default Re: Buying property back in UK as Australian tax resident

Originally Posted by Helen1964
Hi
Yes, you’ll pay stamp duty on your house purchase.
As far as I can make out, if you already own your primary residence (even if it’s in Australia) when you buy the new place in Scotland, you’ll pay a 4% Additional Dwelling surcharge. I haven’t checked the Scottish rules but - if they’re like the English ones - you‘ll be able to reclaim this money if you sell your primary residence within a certain timeframe.

In England there’s a further 2% surcharge if you buy as a non-UK resident. This can be reclaimed if you spend 183 or more days in the UK in the 12 months immediately after the transaction date.

I can’t see any mention of a surcharge for non-UK residents buying in Scotland - perhaps there isn’t one?

https://www.gov.scot/policies/taxes/...ansaction-tax/
Thank you Helen!

I am a cynical old ex-teacher and journalist, so I find it hard to believe there is no surcharge in Scotland 😉 I will be a UK resident upon re-entering the country, but it may take a while to be once again designated resident for tax purposes, so I don't know if this is a different thing. But I won't be going anywhere after this, except in a wooden box 🤣

However, I will be selling my primary residence in Australia before moving, and using the proceeds to buy in Scotland, so this will hopefully not be an issue.
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Old Aug 24th 2022, 6:44 am
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Default Re: Buying property back in UK as Australian tax resident

Originally Posted by Claire Crossley

I won't have any Aus income other than potentially from my Aus super fund, if I'm unable for any reason to transfer it to the UK. I haven't tried yet, but it should be completely portable due to my age.
Although in theory it is possible to transfer a foreign pension pot to a UK provider, in practice it's next to impossible to find one willing to accept it.
Scroll down to the relevant section of this page: https://www.moneyhelper.org.uk/en/pe...nother-country

We're moving back in the next couple of years and we've found the easiest way is to withdraw 100% of our super whilst still Aus tax residents, at which point it just becomes your savings, and then transfer the money to the UK. This transfer of savings isn't liable to UK tax.
If on the other hand you do this once tax resident back in the UK, any withdrawal from super is treated as part of your worldwide income and taxed at your marginal rate.
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Old Aug 24th 2022, 7:07 am
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Default Re: Buying property back in UK as Australian tax resident

Yikesy - thanks so much! I shall be on the phone to HESTA tomorrow morning 😱😁
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