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Leon, Solicitor
Category: Australia Law
Satisfied Customers: 42330
Experience:  18 years experience. Admitted in New South Wales and the UK.
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Tax Law Query I want to understand the CGT implications of

Resolved Question:

Tax Law QueryI want to understand the CGT implications of selling my property in Sydney, NSW.
- I bought it jointly with my ex-husband in Aug 2003.
- We lived in it till Jul 2007, when we rented the property out & we rented elsewhere.
- In Nov 2007, we separated & it in July 2008 the property was transferred into solely my name. I continued to rent the property out and still do presently.
- In Sep 2011, I moved & became a resident in the UK.
- I still live in the UK, but am thinking of returning to Australia next year.- Based on my calculations, the property should be CGT-free until Jul 2013, under the 6 year rule. Would my Australian non-residence impact this?
- It is my understanding that from Jul 2013, I have to pay CGT on 100% of the gain, as I am a non-resident. Is this correct? If so, does that mean that I should organise a retrospective valuation as at the end of the 6 year period? (i.e. Jul 2013)?
- If I move back to Australia and continue to rent it out, its my understanding that I can claim the 50% CGT discount of gains after the date of moving back. Is this correct? If so, do I need to get a valuation as at this point? Would I need to hold the property for 12 months from the date of moving back to claim the 50% discount? Or would I have already met this test previously?
- If I move back to Australia and move back into the property for a few months (as my main residence) and then move elsewhere, can I claim a CGT exemption for another 6 years? Would this change if, when I moved elsewhere, it was a property that my husband bought solely in his name (I re-married in 2012)?Thanks
Submitted: 1 month ago.
Category: Australia Law
Expert:  Leon replied 1 month ago.

Good Afternoon,

My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. Please understand this is not legal advise but a guide to assist you.

Because the property is owned in individual names and not a corporation you pay CGT on 50% of the profit.

You will get some exemption for it being your principal place of residence but how much I cannot say your accountant will have to work all that out when he prepares your turn.

You will need to have a valuation at the time of purchase, after the 6 years and then time of sale. The first and the last will be the price on the contracts.

Also if you are in the UK at the moment you will also have to declare the Capital gain in the UK and the tax paid in Australia. It is income and you will get an exemption on the Australian paid tax but if the UK tax is more then you will pay the difference.

I hope this makes sense and is of assistance. If there is nothing further

thank you for using my services.

If I have missed anything, or you have any further questions please let me know

If there is anything else in the future please do not hesitate to ask.

Please do not forget to leave positive feedback.



Customer: replied 1 month ago.
Thankyou. So does the new law where non-residents have to pay 100% of CGT after May 2012 impact the 6 year CGT-free main residence rule?Also, can I reset the 6 years by moving back in for a few months and then moving into a house owned by my husband?
Expert:  Leon replied 1 month ago.

Good Morning,

This is the link you need to read about the law applying to non residence.

If you did not obtain an independent market valuation as at 8 May 2012 you are not eligible to the discount.

Your accountant in Australia can give you more details.

Customer: replied 1 month ago.
Thanks Leon, this link refers to how being a non-resident impacts the 50% CGT discount, but my question is about the main residence 6 year rule and whether being a non-resident impacts this. Regards Tania
Expert:  Leon replied 1 month ago.

Good Morning

That applies to all.

If you have lived in it and then decided to rent you can claim it as your principal place of residence for up to 6 years.

But you must have lived in it.

I hope this is clearer?

Customer: replied 1 month ago.
I have lived in it before renting it out, but I wanted to check whether being a non-resident for the last 2 years of the 6 years impacted eligibility for the main residence 6 year rule. After the 6 year period finishes, would I need a valuation to calculate CGT or is it based on pro-rata years?
Expert:  Leon replied 1 month ago.

Yes you can be a non resident and claim the 6 years. Many australians do that.

They move to work overseas and are not residence for tax purposes but can claim the 6 years.

Customer: replied 1 month ago.
Thanks! And after the 6 year period finishes, is CGT based on a valuation from the 6 year point or on a pro-rata of the years (eg. If rented out for 8 years, CGT based on 2/8 of gain)?
Expert:  Leon replied 1 month ago.

Good Morning.

My understanding is that the CGT is then apportioned for the time you lived in it not the 6 years. But your accountant is the one to best advise on that.

Leon, Solicitor
Category: Australia Law
Satisfied Customers: 42330
Experience: 18 years experience. Admitted in New South Wales and the UK.
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