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Where Taxpayers and Advisers Meet

CGT - non resident landlord returning to UK

3fs
Posts: 2
Joined: Mon Jan 05, 2015 4:24 am

CGT - non resident landlord returning to UK

Postby 3fs » Mon Jan 05, 2015 5:13 am

I am UK/AUS citizen (UK born) and have been resident in Australia since July 2002. I am planning to return to the UK permanently in 2015 and would like some guidance:

I purchased a house in the UK in May 2010 for 300k with the intention of it becoming my future home. The house is spit into a lower ground floor flat (about 1/3 total floor space) and main house (remaining 2/3 floor space), it is a single freehold.

The house and flat have been rented out separately since August 2010 (with a few short gaps in tenancies), I have never lived in either. I pay tax on the rental income in Australia and file a self assessment each year with HMRC UK. I don't own any other property except for some vacant land in Australia.

I am considering returning to the UK and selling the house in late 2015 or 2016 after making some small improvements. I plan to move into the lower ground floor flat and continue to rent out the main part of the house until I put it onto the market.

My questions are:

1/Should I return to the UK and become resident before or after April 6th 2015 to minimise CGT liabilities or deosn't it matter?

2/Once I become UK resident can I claim an exemption from CGT as a non-resident property owner for any gains made up to April 5th 2015 assuming I remain non-resident until that time?

3/What CGT would be payable if the property were to sell for example in November 2015 for 400k assuming I move into the flat after April 6th 2015 and continue to rent out the main part of the house until completion?

4/Does owning vacant land in Australia have any bearing on the situation? (I am planning to sell this also and will pay CGT at the time of sale)

Thankyou in advance for any advice or suggestions you can provide.

3FS

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: CGT - non resident landlord returning to UK

Postby GlobalTaxAdviser » Mon Jan 05, 2015 8:38 pm

Hi

On your questions

1/Should I return to the UK and become resident before or after April 6th 2015 to minimise CGT liabilities or deosn't it matter?

Doesn't matter -Better to sell the property before you arrive in the UK as I understand the gain will be split between non-chargeable and chargeable. This needs to be confirmed.

2/Once I become UK resident can I claim an exemption from CGT as a non-resident property owner for any gains made up to April 5th 2015 assuming I remain non-resident until that time?

~Yes but you needed to be UK resident for at least four of the seven tax years prior to the year of your departure.


3/What CGT would be payable if the property were to sell for example in November 2015 for 400k assuming I move into the flat after April 6th 2015 and continue to rent out the main part of the house until completion?

I suspect there wouldn't be massive gains from April 2015 when the property value will get uplifted to market values. Plus you would not pay CGT due to PPR. The rental part will be covered too under letting relief, 18 months + capital exemption allowance


4/Does owning vacant land in Australia have any bearing on the situation? (I am planning to sell this also and will pay CGT at the time of sale)

Yes if you are sell when you are resident in the UK and presumably domiciled in the UK then you will be taxed on the gain. You may end up paying tax twice and depending on the double tax treaty between UK and Australia you may get a tax credit in one of the countries

This area is complex and legislation new (and unclear in parts) and suggest you do speak to the international tax specialist before you arrive in the UK to minimise tax in both UK and Australia.

Kind Regards

Sash

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: CGT - non resident landlord returning to UK

Postby GlobalTaxAdviser » Mon Jan 05, 2015 8:38 pm

Hi

On your questions

1/Should I return to the UK and become resident before or after April 6th 2015 to minimise CGT liabilities or deosn't it matter?

Doesn't matter -Better to sell the property before you arrive in the UK as I understand the gain will be split between non-chargeable and chargeable. This needs to be confirmed.

2/Once I become UK resident can I claim an exemption from CGT as a non-resident property owner for any gains made up to April 5th 2015 assuming I remain non-resident until that time?

~Yes but you needed to be UK resident for at least four of the seven tax years prior to the year of your departure.


3/What CGT would be payable if the property were to sell for example in November 2015 for 400k assuming I move into the flat after April 6th 2015 and continue to rent out the main part of the house until completion?

I suspect there wouldn't be massive gains from April 2015 when the property value will get uplifted to market values. Plus you would not pay CGT due to PPR. The rental part will be covered too under letting relief, 18 months + capital exemption allowance


4/Does owning vacant land in Australia have any bearing on the situation? (I am planning to sell this also and will pay CGT at the time of sale)

Yes if you are sell when you are resident in the UK and presumably domiciled in the UK then you will be taxed on the gain. You may end up paying tax twice and depending on the double tax treaty between UK and Australia you may get a tax credit in one of the countries

This area is complex and legislation new (and unclear in parts) and suggest you do speak to the international tax specialist before you arrive in the UK to minimise tax in both UK and Australia.

Kind Regards

Sash

3fs
Posts: 2
Joined: Mon Jan 05, 2015 4:24 am

Re: CGT - non resident landlord returning to UK

Postby 3fs » Fri Jan 09, 2015 11:52 am

Thankyou for taking the time to reply.

Best Regards

3fs


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