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bigduckontax, Accountant
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I purchased my property in April 2007 and lived in it for

Customer Question

Hi
I purchased my property in April 2007 and lived in it for 58 months. I then moved to Australia in 2012 and rented out the property for 26 months until it was sold in May 2014
I bought the flat for 349,950 GBP and sold it for 518,000 GBP. It required a new roof in 2010 which cost 10,000. Other cost associated were 15,000 Estate Agents Fees, 10,000 stamp duty, 3500 GBP for solicitors fee etc
I pay tax in Australia
How much CGT will I need to pay to the UK.
Kind Regards
Alan
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Alan, I am Keith one of the experts on Just Answer and happy to assist with your question. You will be liable for UK BGT on the gain made on this sale, but not for the full amount. The gain is 518K - 350K - 10K - 28.3K = say 130K. Now take the total ownership period in months, 84. Take the let period plus 18 [you are deemed to be in occupation for the last 18 months of ownership even if this is not the case]; 44 months. Take 44 from 84 = 40. 40/84 [say 48%] is the proportion of the gain exposed to CGT. 48% of 130 is 62.4. Deduct your annual Exempt Amount (AEA) of 11.1K leaves 51.3K exposed to UK CGT. But soft, you are entitled to Lettings Relief (LR) of up to 40K instead of AEA which could reduce you liability considerably. It could be as low as 22.4K which would be taxed at 18% or 28% or a combination of the two rates depending on your UK income including the gain in tax the year of sale. Worst case scenario is CGT of some 7K of tax due. Australia does not have a CGT regime, all such gains being subject to income tax. The UK gain you make is subject to Australian Income Tax, but under the Double Taxation Convention between the UK and Oz any tax paid in the UK is allowed as a tax credit against any Australian tax so you do not get taxed in both jurisdictions on the same gain. The Convention does not protect you against differences in rates of taxation. I do hope that my answer has been of some assistance to you. All my figures have been rounded as you will see.
Customer: replied 1 year ago.

Keith Thank you for your answer.

Still a bit Confused

If I have occupied the flat for 58 months and let it out for 26 should the last 18 months ( which are deemed occupation) become part of the occupation total

i.e Occupied for 58 months

Rented out 26months (reduces to 8 as last 18 months is deemed occupation)

Therefore - 84 - 6 = 76 is the amount Private relief is allowed for

as percentage this means that 10% is liable for CGT

So if 51.3K is subject to CGT means circa 5K bill before Lettings relief (not sure how this works)

I would be grateful for this clarification

Thanks

Alan

Expert:  bigduckontax replied 1 year ago.

Letting period was 26 - 18 = 8.

Total ownership period was 28 + 56 = 84.

84 - 8 = 76.

8/84 is say 9.5% so that is the proportion of the gain subjsct to CGT.

9.5% of 130K is say 12.3K.

Deduct AEA or LR leaves nil [LR assuned at maximum] liable to CGT.

Sorry I added instead of subtrcted. Must be the jet lag moving from the UK to the Far East.

You should escape UK CGT, but will be ilable for Oz Income Tax on the 130K.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3614
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support and deep apologies for the initial mental aberation

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