If possible we would like to keep our house and rent it out. The mortgage will be being paid off and then in the future we own it. What worries me is, if we don't sell it and take the money with us, will we have to pay 40% tax on the eventual sale of the house? In which case we are better to cut our losses and sell now. Then we reach the next problem, endownment policies, I think this has been touched on before in various other postings, but can't find an answer, if you sell them you loose all your bonuses, which is our case, we have built up over 15years, but if you don't sell them, will they tax at 40%. There must be a way around all this, if not it seems like you are being penalised, whichever option you take. The whole point of emigrating is to have a better life, but if they are going to take a large lum sum of our money, it is less appealing.

If anyone could help on these matters or advise us of sites or organisations that can give us the answers, it would be very much appreicated.

We are starting to panic.

Thanks

Mayo

Not an expert in this area but the situation seems to be as follows:

As a tax resident in Aus, you will be taxed on the annual growth of any overseas investment (including endowments and pensions) e.g. the value of your fund grows by £5k in a year, you get taxed on this at he prevailing rate (which I believe could be as high as 48%.
We are leaving in August for Brisbane and the only conclusion I could come to was to cash my endowments in. Just got the money through and put a deposit on some AUS$.

Thanks Marty

Not quite the answer I was hoping for, but it looks like the only option. Don't you loose quite a bit by cashing in your endownments early?

Thanks for your reply and I wish you all the very best in Brisbane, I wish we were going that soon, we are looking at early 2005, fingers crossed.

Regards,
Mayer

i have endowment in the UK. iasked for a 'leave in' value and a 'cash in' value to see the cost of pulling out. the 'cash in' value was higher!! maybe i am just unlucky with my provider but ask the question!

when you sell the house you will pay tax on the progit, but if you have owned it for more than a year you will only be taxed on half of the profit. if you do not sell it, when you leave the UK, you will be taxed on the profit on paper at the time you leave , less 50 % if you have owned it for more than a year.

the upshot is, they tax you blind, but also once you are here, you will see that they engourage investment through tax incentives and share the risk with you!

work out some scenarios and see which works for you, but at the end of the day make sure you do not plan to fail!

i sold up, i have friends who have rented out in the UK. the property prices in both countries have sky rocketed in the last few years. what i can say, is that Sue and I are excited about buying a kick-ass house at the moment whilst our friends are stuck in their reted property.

there is not right answer, but do not fixate on the tax, if you have nmoney here, you will most likely be able to make the best of the tax opportunities!

MikenSuze2,

Thanks for your reply. Am I reading it wrong, or did you say they tax you on the profit. This is the first I have heard of this - oh my god - how much do they tax you.

What on the off chance it doesn't work out and you want to come back, you would have paid out so much tax, you would come back worse off. Surely this can't be right, I thoguht as long as it was your home (not a second home as investment), that you didn't get taxed?

Yes that is right, they tax you on the profit.

In general, any investments you have, have a value on the day you arrive in the UK. The profit is measured in the increase in value from the day you arrive to the day you sell or leave the country.

If you have owned the house/shares for more than 12 months then they only tax you on 50% of the profit.

There are tricks you can play I believe, if you have lived in the house in the UK for more than a year then you can nominate that as your primary residence for up to 7 years. You pay no tax on the benefits from the sale of your primary residence.

You can actually own two homes and chose which house is the primary residence and therefore tax free profit. but that means you will be liable for the tax on any profit on the Aussie home, if you own one.

I do suggest you seek professional advice before leaving the UK, and make sure it is some one who understands up to date Aussie tax laws. Significant changes happened in Feb this year so an out of date or UK only advisor is no good.

If anyone tells you about offshore accounts , find a new advisor, you will be taxed on those aswell.

Don't get hung up on tax, it sounds horrendous compared to the UK but it is not so bad.

a couple of examples:

you can borrow money to buy shares and if they go down, the loss is tax free. try that one in the UK!

you can borrow 95% mortgage on a house, watch the value grow, sell after more than one year and retain 75% of the profit. remember you had no collateral!

when peolple tell you about 47% tax, remember there is no national insurance at 9% as in the UK!

Mike