Is an Australian domiciled UK resident liable to UK CGT for an investment property bought while living in Australia but sold after moving to the UK?

Is an Australian domiciled UK resident liable...

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She had always lived in Australia and bought the property, which is in Australia, to rent out as an investment, i.e. she acquired the asset while resident in Australia. She moved to the UK in 2010 and sold the property in 2013. She continues to live in the UK.

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Portia profile image
By Portia Nina Levin
04th Nov 2014 13:46

Planning?

I assume that this is hypothetical and that you are asking so that you know how do give the correct advance advice should the issue ever come up.

If she disposes of it in a tax year in which she is resident, her entire gain is taxable in the UK. There might also be tax consequences in Oz and double tax to think about.

She is taxable on a remittance basis and does not yet need to pay the remittance basis charge. Unfortunately this is not a foreign gain, so that does not help.

What she should have done is to have made damn sure she was not resident and was not caught by the temporary non-residents rules when she disposed of it.

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By Montrose
04th Nov 2014 15:01

CGT on Australian Gain by non don client

Ms. Levin has I believe confused residence with situs. The situs of the asset sold is clearly not in the UK, so that the gain is potentially taxable on the remittance basis. As client has not been resident in the UK for 6 years , no £30k fee to claim the remittance bais applies.

Two other points

1] She wil lose her UK  personal allowance on claiming the remittance basis for 2013/4

2]She will be liable to Australian CGT on the gain- is that greater than any UK CGT? If so, don't claim the remittance basis, but claim tax credit relief instead.

Remember that the gain in Australia is calculated on the gain in AUS$, whilst for UK purposes the gain is calculated in sterling;  the taxable gain in Australia is not the same as that for UK tax purposes.

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Portia profile image
By Portia Nina Levin
04th Nov 2014 15:23

Agreed

I had misread the OP as the property concerned was situated in the UK. I was most certainly not confused between residence and situs.

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By bernard michael
04th Nov 2014 15:37

Alos she will get relief

Also if she pays AUS tax she will get relief against UK CGT of the lower of the UK tax payable or the AUS tax payable

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By Michael Beaver
05th Nov 2014 08:49

May be exempt for CGT in Australia

This may not be applicable, but if the property was your client's main residence at any point and she hasn't acquired a new residence (i.e. has been renting), then she can designate the property as her main residence, even if rented out.   If she sells within 6 years of moving out the gain will be exempt from Aussie CGT.  

 

https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Real-estate/Treating-a-dwelling-as-your-main-residence-after-you-move-out/

 

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By jttax
05th Nov 2014 10:46

Wonderful

Very clear answers, thank you so much for your help.

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