Moved to Australia, will we have to pay CGT on Husbands House

[Binnz10]

My husband and I both bought our own properties before we met. 1997 (his) and 1998 (mine). Both were bought as our place of residence. In 1999 he decided to travel and therefore rented his property out and has done since. On his return we lived my house. In June 2006 we left the UK to live in Australia and are wanting to sell his house so that we can afford to build here. Will we be liable for CGT on the sale of that house. If so is there any way we can minimise this? Thank you.

[The Ivy Office Ltd]

You will not be liable to uk CGT as you are not resident in the UK at the time of sale

However you should not become resident in the uk again until after 5th april 2012. if you do then uk cgt will be due

you may be liable to aust tax

dennis@taxesclear.co.uk

[JSK TAXATION]

Binnz10

You need to take specialist advice on these issues; as always things are not as clear as you would imagine.

To avoid a CGT charge in the UK (ignoring for the moment the fact that both properties could in any event attract private residence relief should they be taxable in the UK), you would need to demonstrate that you have left the UK permanently. Without doing so, you will remain ordinarily resident in the UK and therefore taxable on gains arising from worldwide assets.

Once this obstacle has been overcome, and provided you have definitively become resident in Australia, then any gains will be subject to tax in Australia. However, the encouraging position here is that Australia use a rebasing system for valuing assets held by people coming into the country. This works by rebasing the assets to their market value as of the date of immigration.

That being the case, any gains would therefore be restricted to the difference bewteen the sales price and the MV at date of immigration.

Kindest regards,

John S King
Chartered Tax Adviser
www.taxation-advice.com