How do i work out what CGT I'll pay on a UK property sale?

Hi all

Thought I might find the answer easier here by asking.

I'm thinking of selling my uk property as we can no longer tap the equity to buy the next ip.

Bought in 2003 for £123,500 and now valued at about £230,000.

Selling costs at about 4% I think and its been rented since we moved here in 2012.

I earn up about $160,000 and recently we put the entire property in my name as part of the last remortgage. Long story but it was the right thing to do at the time. We havent sold yet so may be better off putting back into joint names before we do.

I've taken a look into the ATO website but nothing there is clear so if anyone has a ball park figure I'd appreciate it.

We are trying to see what we would actually walk away with. The property is in Kent which is just next to London. The market has been good for a few years. Looks like it's cooling off a little at the moment.

Current exchange rate is about $1.7 AUD to the £

Thanks

Paul

 

Are you an australian tax resident ?

Have you always been an australian tax resident ? If not when did you commence being an australian tax resident ?

Did you account for CGT on the transfer of the property from joint names into your name ?

 

No money was paid to anyone during the transfer.

 

Market value substitution rule. You would need to have accounted for cgt on the transfer based on market value.

You will have two CGT events. One to the joint owner on the transfer to you. And then another on sale. Two different cost bases for you.

 

Wow - you should seek advice on declaring the CG that you missed reporting.

 

@Terry_w probably ok as if recent will be in this financial year and reported in the 2018 return.

 

Actually there are further issues. if you were claiming the interest on a loan relating to this property you would only be able to claim part of it after the transfer as it was a transfer without consideration. if you were 50/50 owners before then only half of the interest going forward could be deductible.

Who advised you on this?

 

Excellent. Sounds like I've opened Pandoras box.

No advice... well.. the UK mortgage broker.
We were going through a remortgage which needed us to leave to country while the remortgage took place ( some wierd law).. as we didn't realise that my wife would also need to join me until I arrived at the airport and everything was fully in motion the easy way out was for her too just sign it over to me rather than halt the entire process and lose the flights too.

 

Its ok not much you can do now and you are in australia together so thats a good thing.

But yes you will have CGT on the transfer. If it goes back to 2012 when you moved here its interesting as the ATO and you can only amend 2 years worth of returns in general.

Im more concerned you said it was recent.

 

The transfer was late 2016 from memory. I think the value at the time was £185k

 

Might be able to argue you are trustee for the wife anyway.

 

Ahh ok then yes you will need to include it in your wifes 2017 return.

 

So to clarify, she made no money on the "sale" yet there will be tax to pay?

Can we not just revert back?

 

Thats right market value substitution rule.

Would need to see what you signed to change title. A lawyer would need to review that document. Maybe you only changed the loan and not title to the property.

 

Ok. I'll have to take a deeper look into this. Thank you for everything so far.

If we hadn't made that mice do you know what we would be paying in CGT?

 

West Kent is 'just next to London' but most of Kent is miles away.

 

If we're splitting hairs my house is 37 miles from Big Ben.

 

Not sure how many hairs we are splitting - I have an IP in Rochester - is yours anywhere near there?

 

Gillingham near the river