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TonyTax
TonyTax, Tax Consultant
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In which country do I have to pay capital gain tax? Selling

Resolved Question:

In which country do I have to pay capital gain tax? Selling our property in the UK but live in Australia and have been claiming tax from our Australian tax for los due to this property in the last 7years.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Do we have to pay tax in both countries? If so we will end up with no money from this property.
Expert:  TonyTax replied 1 year ago.
Hi.
You may pay tax in both countries but any CGT you pay in the UK will be deductible from the tax you pay on the same gain in Australia. Article 13 of the UK/Australia tax treaty deals with capital gains. The treaty can be found at the link below:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/410703/uk-australia-dtc.pdf
Had you sold your property by 5 April 2015, any gain you made would have been exempt from UK CGT by reason of your non-UK residence. However, as you will read in the notes at the link below, gains made by non-UK residents on the disposal of UK residential property after 5 April 2015 may incur a UK CGT liability.
https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property
You have a choice as to how to calculate the gain for UK CGT purposes. You can use the 5 April 2015 value as your "cost" instead of the original purchase price which should cover most of not all the gain you make from a disposal at this time. You should get a written valuation of your property as at 5 April 2015.
Assuming the property was your main home at some point during your ownership of it, you will qualify for relief from CGT for the last 18 months of ownership of the property so that if you sell it by 5 October 2016, you will have no CGT to pay. See the first example in the link above.
There are alternative methods detailed in the link above which take account of the whole period of ownership but these are unlikely to be as advantageous as the first method unless you make a loss on the sale of the property.
You need to read the notes about reporting the gain to HMRC in the UK at the bottom of the link above.
You should seek expert local advise on your tax position in Australia.
I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 1 year ago.
I should have said if you sell the property by 5 September 2016, you will have no CGT to pay in the UK which is 18 months from 5 April 2015 so long as the property was your main home at some point during your ownership of it.
Expert:  TonyTax replied 1 year ago.
That's assuming you use the 5 April 2015 value as your cost for UK CGT purposes and ignore the period prior to 6 April 2015.
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