CGT- Sorry!

[kensden]

Can someone tell me if I have stuffed-up. I am a UK citizen born and bred, I became non-resident on 10/06/05, when I moved to Australia.

I had two options:

OPTION 1: Rent out my only and main residence (owned for eight years). QUESTION If at some point I then sold this house (my only and main residence) at some point in the future would I have had to pay Capital Gains. If so? is it down to the fact that I had let my home and if I hadn't had let it, then I would not have had to pay CGT?

OPTION 2: This is the option I took, I sold my house and bought another in a more rentable area but the sale completed three weeks after I left for Australia. I never lived in the property, the house was let immediately QUESTION: Presumably I will have to pay CGT on this property when I eventually sell? If so how much? Is there anyway I can minmise or avoid CGT in this instance?

[Tax Accountant]

Can someone tell me if I have stuffed-up. I am a UK citizen born and bred, I became non-resident on 10/06/05, when I moved to Australia.

I had two options:

OPTION 1: Rent out my only and main residence (owned for eight years). QUESTION If at some point I then sold this house (my only and main residence) at some point in the future would I have had to pay Capital Gains. If so? is it down to the fact that I had let my home and if I hadn't had let it, then I would not have had to pay CGT?

OPTION 2: This is the option I took, I sold my house and bought another in a more rentable area but the sale completed three weeks after I left for Australia. I never lived in the property, the house was let immediately QUESTION: Presumably I will have to pay CGT on this property when I eventually sell? If so how much? Is there anyway I can minmise or avoid CGT in this instance?

Final 3 years of ownership is always regarded for CGT purposes as occupied by yourself, even if let, provided it was your only or main residence at anytime in your ownership. Even if sold more than three years after vacating it, there are other reliefs which could cover all or part of the gain relating to the excess period.

However, you sold it after you moved to Australia. Although there is no CGT liability in the UK, you should check the tax position regarding Australia as you would already have been a resident of that country.

In this context, you should rememebr that the relevant date of disposal is the date of exchange of unconditional contracts and not the date of completion.

Your new property in the UK has never been your only or main residence. As such you will be charged to UK CGT upon its eventual disposal. However, if you remain non-resident for 5 complete UK tax years and dispose of the property before you return to the UK to resume your residency, you will not be charged CGT. Again. you need to check the Australian tax position if you sell the property whilst in Australia.

You should remember that you are still responsible for accounting for income tax on rental profits by completing UK tax returns. Otherwise, the letting agent is required to deduct tax at source from the rents collected.

Ramnik

[kensden]

Thanks for your help, it only confirms that I stuffed up, I should have kept my original house even if it was located in an area less likely to achieve a decent rent!

[Tax Accountant]

Thanks for your help, it only confirms that I stuffed up, I should have kept my original house even if it was located in an area less likely to achieve a decent rent!

There is no point in brooding over what happened.

You say that you have became non-resident on 10/06/05 when you moved to Australia. Are you likely to return before 5 April 2011?

And are you likely to sell the new property before or after you return to the UK?

Ramnik

[kensden]

You've hit it on the head these are my two choices. Either sell it soon and buy here in Oz or wait until the five tears are up. I'd just be ticked off if i had to sell in four years or so, Edinburgh is still gowing well, the thought of sharing my profit with HMRC does nothing for me

[Tax Accountant]

You've hit it on the head these are my two choices. Either sell it soon and buy here in Oz or wait until the five tears are up. I'd just be ticked off if i had to sell in four years or so, Edinburgh is still gowing well, the thought of sharing my profit with HMRC does nothing for me

If the house is letting well and paying for itself, may be there is no point in selling.

Do you need to sell here to be able to buy over there?

Is not selling here stopping you buying over there?

Even if you sell over here, perhaps there isn't much gain in the short period you have owned the property. If so, may be there isn't much of a CGT issue in selling.

Ramnik

[kensden]

I think you are on the money on all points, Sydney prpoerty prices are flat (have been dclining after a massive boom), Edinburgh is growing, so even though I have to share my profit with HMRC, I'm still ahead of the game.
Cheers

[Tax Accountant]

I think you are on the money on all points, Sydney prpoerty prices are flat (have been dclining after a massive boom), Edinburgh is growing, so even though I have to share my profit with HMRC, I'm still ahead of the game.
Cheers

You are welcome.

Ramnik