Any Aussies living in UK with Property still in Oz. Do you have a strategy?

Hi guys,
Just wondering if anyone out there is in similar boat as me and could possibly offer an opinion based on experience. My family and I have just moved to UK for longish period, we moved for family reasons, wife is from UK and wanted to be closer to family for a while so we are here with the kids for 5 or so years. I'm now wondering how to go about dealing with the financial and investment management of my assets and cash which is all still in Australia.

I have 1 property in Sydney that I've owned for about 6 years, it has doubled, is Neutral CF and I want to hold onto for the long term. (risk that If I sell and the market moves again we'll never be able to get back in.) I've got a bit of equity sitting in an offset but really no idea how to use it now that we've moved to the uk.

Anyway, if you are also in UK, or perhaps in another country, and have similar experience then i'd love to hear how you go about it. Things like:
- Do I use my Oz equity, tfer it to UK and use it as a deposit on a house over here?
- Capital Gains Tax and non-resident aussies, how are you looking ahead at the impacts of this new ruling?
- Is it better to use equity to invest in other asset classes now the govt are determined to smash non local investors?

That's about it for now but would be keen to here from anyone with similar stories. I was planning on going hard on a few purchases back in Oz using the equity but that has obviously changed. I'm enjoying the move to UK and it's for the right reasons but can't help think about the opportunity cost of not being able to properly use the equity back in Oz.

Cheers and look forward to some feedback (hopefully )

 

Did you realise that the 6 year rule can't apply to the property, and there is no 50% CGT discount available?
You possibly should have sold before you left - perhaps to a related resident company.

 

urs seem bit complicated for a forum.. get a accountant lol

 

I read a book recently saying that since someone who is a non-resident of Australia does not need to pay Australian tax on income sourced outside of Australia while you are a non-resident, you can just take your offset money out of Australia and invest in the same index funds but from another country and you don't need to pay CGT upon sale. I haven't asked an accountant about this yet though. But if this is correct, then it seems a no-brainer to take your money out Australia and invest in externally and screw the same govt that is screwing you, by letting your actions say that if the govt doesn't want to give non-residents the same 50% CGT discount as residents, then they will get zero CGT.
Although I don't know what you tax would be in the UK though regarding money invested from outside the UK/Aus.

 

That sounds incorrect. Australia has tax treaties with other countries to primarily stop people from paying tax twice. In this instance, because it's someone who seems to be a non resident for tax purposes, they will pay CGT tax on sale of their Australian assets as I understand it.

Get some paid tax advice.

As for the rest of it, talk to your significant other about your goals for the future and go from there. There's no simple answers.

I can only see the government making ownership harder for non residents in the future on both sides of the political spectrum.

 

I did not say they won't need to pay CGT on their Australian assets.
I specifically said this is for assets that are outside Australia and then only for the period of time that you are a non-resident for tax purposes.

 

A non-resident doesn't pay tax here on income earned overseas - generally.

 

Non-residents don’t pay CGT on australian shares... generally

 

If a non-resident puts money comsec (ie from within Australia) and then invests the money there on Australian index funds, are you saying that when you sell those shares you do not have to pay CGT if you were a non-resident for tax purposes from the purchase to sale period?

I was under the impression that in this case, the income is sourced from within Australia and therefore CGT was payable, although have not yet spoken to an accountant about it so maybe this is wrong?

 

It depends.
At a very high level -
Non-residents only pay CGT on real Australian property owned directly or indirectly.

As a point I’m pretty sure Commsec only allows residents to open an account. However there are other platforms available.

DYOR

Blacky

 

Yes

 

Ahhh.
I assumed a capital gain is a capital gain regardless if it was from shares or property. Weird that CGT is payable on sale of a property but not on shares. Any idea why they treat them differently?

 

I thought this isn't getting implemented till mid 2019 - so couldn't they sell the house free of CGT due to 6 year rule now?

 

I guess to encourage foreigners to invest in companies here, but not in land! Helps the economy without increasing house prices.

 

Good point. If the property was acquired before 9 May 2019 this won't apply unless disposed of after 30 June 2019 so there is still time to plan.

 

Thanks for all the responses so far.
We decided not to sell as we always planned to hold on to it for the long run anyways. Moving to the UK is planned to be for the next 4-5 years. CGT would be pro-rata anyway and mortgaged the month before we left so have a good gauge of the value to do any CGT calcs on if required. I will definitely be seeking accounting advice on this.

I'm also interested in what to do now moving forward in terms of investing and wondering if there are others in a similar situation hence the post. I hit my 40's last year and really want to make some sensible choices moving forward but to date I've struggled to find any info or advice on the challenges of managing monies while living between 2 countries without going into these elaborate posts and groups involving offshore 'schemes' for 'international citizens'.

Hope that makes sense and thanks again.

Cheers
Matt

 

I have friends with AU IPs who are based overseas, they intend to sell within the next 12m