Hi all

First timer here so please bare with me. My Australian wife and I will soon be moving to Australia (next couple of years), I'm English but have a spouse visa that says "permitted to stay indefinately" issued last year. My father has a small rental property that he wishes to gift to us, but he will be due to pay cgt on the disposal of approx £15,000. He has basically said this can happen as long as I pay him back the £15,000. I plan to get professional advise on this, but there is talk that the cgt uk rate of a flat 18% may go up in the budget in a couple of weeks, and so unless I can come up with an alternative, I am looking at a £15,000 bill. Not bad for a house, I am very grateful to him, but if we are moving to Australia I have read of uk cgt being exept if you stay away for 5 years? My thought process being that if instead of transferring the property outright, it could be put in a Trust, then the total cgt could be deferred until disposal of said property, and if I did not dispose of it until we had been in Australia for over 5 years, would I have to pay any cgt at all.

I may be exceptionally confused here, but any input would be welcome. As I said I plan to talk to Allen in detail about our affairs but as this is something that needs to be decided in the next week, I thought I would at least ask the forum first.

Best regards

Simon

Not sure about the UK tax side of things.

BUT

If you are considered tax resident in Oz your worldwide income becomes liable for tax in Oz. Maybe the 5 year rule does apply in UK, but when you sell your UK property you will be liable for tax on half the CG on the property since you moved to Oz. Their is tax agreement between OZ and UK so any tax you pay in UK is deductable against tax in Oz.

But you will have to pay tax either in UK or OZ when you sell and any net income you make from the property before you sell.

NOT a tax expert just well informed.

Kiwipaul, I want to add something to your response...

"you will be liable for tax on half the CG on the property"

This is not entirely correct given the situation as explained.

The 50% CGT discount that you refer to is ONLY available once you have owned the asset for more than 365 days. That means that the title to the property would have to be transfered from Simon's father to Simon. This would create one CGT event. Then when Simon sells the property (more than 365 days after title is in his name) that creates a second CGT event. Simon would then be eligible to take the 50% discount on the sale.

Cheers,
Marilyn

Not current on UK tax but would a transfer from your father into a trust not trigger a CGT event anyway? This would defeat the purpose.

When the asset is sold by the trust this would also trigger a CGT event which would be paid by the trust. The whole scenario of you being in Oz for 5 years is moot as you would not own the asset - the trust does.

You only begin to incur liability for any CGT once you physically own the asset. You also need to consider that if you are going to keep the rental property then you will be liable to Oz tax on the rental income.