Hi all,

My wife and I have been living in Sydney for 3 years as Temporary Residents on a 457 visa. During this time our house back in England has been rented out. This house is the only property we own.

Early next year we should become Permanent Residents through ENS.

We would then like to sell our property in the UK, pay off our mortgage and transfer the proceeds to our bank account here so that we can then purchase our own property here to live in as our primary residence.

The sum of money we are looking at transferring is about $ (AUD) 175,000.

What I would like to know is:-

1. Does the sale of our property in the UK count as a capital gain in Australia ??
2. Do we have to pay tax on the money that we will transfer to Australia - is that considered as income ??

I know that we will have to pay tax on the interest in Australia - that in itself would be a good resaon to leave it in the UK until we are ready to use it in Australia !

Would appreciate any suggestions/advice people might have from their own experiences !

I will start by saying I think you should seek professional advice but my understanding is as follows;

1) Your principal residence is CGT exempt both in Australia and the UK. Under Aussie tax rules you may rent our your PR for up to six years without it affecting the exemption - but if you sell it after 6 years has expired then you lose the CGT exemption. You seem OK under this rule viz Australia.

2) No tax applies on the lump sum except the interest income which is assessable, as you mention.