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I am a uk Resident and sold a residential investment In Oz for a profit do I have to pay capital gains tax?

I own no other property in Australia and rent in th UK.

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3 Responses to “I am a uk Resident and sold a residential investment In Oz for a profit do I have to pay capital gains tax?”

  1. As a resident, ordinarily resident of the UK, you would be subject to tax on the capital gains on the sale of the Australian property. You may want to check with a UK tax accountant whether there may be some relief that is specific to UK tax law when dealing with Australian property, or there might be something in the UK/Australia tax treaty, although the UK/Australia tax treaty would generally relieve you of taxes in the nonresident country (Australia) and not your resident country (UK).

  2. UK residents pay UK tax. NOn residents also pay tax in Australia on income earned in Aus. There are some specific rules about dividends and property held by non residents but at the moment I dont have the reference material at hand howver the effect of tax treaties is to prevent double taxation so if you get taxed here the tax paid would be treated as a tax credit in UK (ie as if tax was paid in England). The ATO website is http://www.ato.gov.au and if you have a hujnt around in there you woul be able to find out about capital gains and also the tax treaties.

  3. I think I may be able to help you with an answer to this question that you might like!

    If you do not and have not owned another property during your ownership period of the property you have recently sold you may be able to claim it is your main residence. This would require you to have physically occupied the property as your main residence for a period of time prior to using it for income producing purposes (i.e. as an investment property).

    If the property has been your permanent residence and you have been absence from it for a period of less than six years (this is not a cumulative time period) you can treat the sale of the property as exempt from Australian capital gains tax.

    If the above does not apply i.e. it was never your main residence and/or you have been absent from it for more than six years, you will be subject to Australian capital gains tax. The calculation of the cost base will be altered by various factors.

    It would be worthwhile obtaining the advice of a tax professional that has experience in this area and mention the above to them (the temporary absence rule). If they have no awareness of the above, move on as they do not have the right expertise to help you. Refer them to section 118 -145(4) of the Australian income tax legislation.

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