CGT and overseas property

Discussion in 'Accounting & Tax' started by TomUK, 10th Jan, 2017.

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  1. TomUK

    TomUK Member

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    Hoping to get some thoughts on the below:

    Owned property in the U.K. since September 2012 (lived in and treated as main residence)

    Moved to Australia in April 2015 with defacto partner who is an Australian citizen (live together)

    Rented out since November 2015

    Considering selling in March 2017

    No properties owned elsewhere

    Am an Australian resident for tax purposes

    Does anyone know what the CGT implications would be in Australia upon sale?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    possibly CGT exempt by using the 6 year rule.
     
  3. TomUK

    TomUK Member

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    By default does my Overseas property remain as my main residence seeing as though I don't own any other property? I am renting currently
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I'm unsure of your long term tax residency issues. A former UK tax resident ? That is my assumed view. Pls advise. I have given brief explanation if you were a AU resident taxpayer the whole time....below final para

    If so, it cannot be a main residence :) Hence it cannot be exempt. It may not be eligible for a CGT discount either as a CGT discount is unavailable during periods of non-residency - Temp residence and other rules may impact this.

    When you become an Australian tax resident certain CGT events occur. Your former home (UK) commences to become a CGT asset only when you arrive here as a resident taxpayer. As you never commenced to reside in it as you were here it cannot be exempt. Thus prior to that it cannot be a main residence as it wasnt a CGT asset at that time. Real property is taxed as UK property not Australian property until you become a AU tax resident.

    If you were an AU tax resident the whole time then the 6 year absence rule may apply and it may be tax free when sold. Worth getting detailed personal tax advice. This sale would be a detection risk for audit as the UK Govt and AU share CGT info so important to get right. The UK withholding on non-resident owners imposes tight reporting in UK that feed its way to the ATO.
     
    Last edited: 10th Jan, 2017
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No, but you may have the option to treat it as such.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Paul makes a good point. It will depend on when you became a tax resident here.
     
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  7. TomUK

    TomUK Member

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    Prior to becoming an Aus tax resident when I moved here in 2015 I was a U.K. Tax resident. I had no prior association with Australia before this
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Did you live in the UK house after becoming an Australian Tax Resident?
     
  9. TomUK

    TomUK Member

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    Edit: Sorry no Terry
     
    Last edited: 10th Jan, 2017
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    in that case Paul's answer above would apply.
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Get personal tax advice.
     
    Terry_w likes this.

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