We have to enter Oz by the 10th may 2006.I have
a house here in UK and a house in New Zealand.
The house in the UK has been our main residence,but we have lived in the NZ house for 6 months earlier this year.As I would like to sell the house in the UK before we go to Oz and keep the NZ house and sell at a later date,could I call the one in NZ my primary residence for CGT,if we rent once we are in Australia.Thankyou.....We are not permanent NZ residents,so could this affect it also?...

You could certainly claim that - but I wouldn't rate the chances of success. Factors that indicate a main residence are bills in owners name (very likely you have this), personal mail delivered to the property etc - but these alone probably won't suffice.

The property will only be assessed for CGT purposes at the market value from the date that you become an oz tax resident. Sell it quickly then CGT could be minimal.

If you have a spouse then it may be prudent to transfer the property into the partner with the lowest income (and therefore lowest marginal tax rate).

I'm not sure of the legal implications in your case but before I left NZ I brought an investment property which I've never lived in and for the first 18 months in Oz I was renting.

I still own the property in NZ and I've not yet decided if I will try and claim the 18 months I rented in Oz the NZ house as my PROR. I think on balance I won't as it's not worth the risk.

BUT when you move to Oz selling your investment property quickly is a doubled edged sword as if you sell within 12 months of arrival you will have to pay CGT on the full gain, whereas if you hang on for more than 12 months 50% of the gain is tax free.

Thanks for your reply.Do you think that if i was to live in the house I have in NZ for a while before entering Australia I could claim that as my Permanent residence for CGT.When you say that if you sell the property after 12months,you only pay 50%CGT,what percentage is that?.Thanks..

What the 50% tax free means is if your capital gain is say $200,000 you only pay tax on 50% ie $100,000. This $100,000 is added to your earned income for the year and you pay the appropiate tax. So if you earned $50,000 in the year you sold the house your total taxable income would be $150,000 and you would pay tax accordingly. The max tax rate is 47% on any income over $95,000.

How do they determine when you become tax resident.Alan said that "USUALLY" you wouldnt become tax resident on a visa validation trip..