[Pete & Sheila]

We have been trying to sell our house since last November without any success. As time is running out for us, we are now looking to let the house out. If we make ago of it in NZ when we come to sell the house eventually as it will not be our main place of residence does this mean we will have to pay capital gains tax on any profit.

[willsken]

If you don't return to the UK then definitely not. I can't remember how long you have to stay out of the country though. We have sold 2 rental properties there and we don't have to pay any capital gains if we don't return to the UK within a certain period. (Excluding holidays of course!)

[Caroline and Dave]

You have to stay out of the UK for 5 years.
You can go back for up to 90 days a year without being clobbered.
We have sold several properties so there is no way we are going back.
You can of course, go to any other Country as long as you don't return to the UK. This is one thing worth remembering for those of you who are renting their place out in the UK , you can sell it without paying capital gains tax but then you have to stay away for 5 years.I am not sure if this applies if you are renting in NZ as the place in UK is still your main home. Someone else may know.


Dave and Caroline

[Moorf]

Have any of you declared anywhere that you have sold these properties on tax forms etc?

[Kate D]

When I first left the UK to work in Germany, my parent company advised to not sell your house under any circumstances without checking with an accountant first, because of potential capital gains liability!

I had a long chat with the Inland Revenue about capital gains tax before I sold my house in the UK after I’d been living in Europe for a few years. It was all quite convoluted in terms of how long I’d owned it and lived there as my primary residence, and whether it was rented out as a residential place and for how long etc. And years out the country was whole tax years, not calendar years, from what I recall There were no examples of this situation in the capital gains tax on line stuff hence the chat. But the person I spoke to was extremely helpful, so if in doubt, I’d advise giving them a call, perhaps for peace of mind if nothing else. Nothing to lose I guess! Especially if tax rules have moved on.

Kate

[Jo Jo]

From reading the responses to this thread, you might think that the only way you can avoid paying CGT on the sale of your property is by staying out of the UK for 5 years after the sale (apart from holidays).

While that's true for properties that you've never lived in, it's not true for properties that were once your primary residence. If the house you are selling was your primary residence, then you can sell it up to 3 years after moving out of it and still not have to pay Capital Gains Tax because the final 36 months of your period of ownership always qualify for private residence relief, regardless of how you use the property in that time, as long as the house has been your only or main residence at some point.

The conditions for qualifying for private residence relief are:


the house was your only or main residence before you sold it, or you sell it within 3 years of it stopping being your main residence and
you have not been absent, other than for an allowed period of absence [see below] from your home during your period of ownership or through living in job-related accommodation, and
the garden or grounds including the buildings on them are not greater than
half a hectare, and
no part of your home has been used exclusively for business purposes during your period of ownership.


With regard to point 2, you can be absent from your house for the following periods/ reasons without affecting your CGT exemption:


absences for whatever reason, totalling not more than three years in all
absences during which you are in employment and all your duties are carried on outside the UK
absences totalling not more than four years when
– the distance from your place of work prevents you living at home, or
– your employer requires you to work away from home in order to do your job effectively.


This is because the final 36 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling-house has been your only or main residence at some point.

HMRC has a help sheet here. (http://www.hmrc.gov.uk/helpsheets/hs283.pdf)

[willsken]

Have any of you declared anywhere that you have sold these properties on tax forms etc?

We spoke to the Inland Revenue and have since declared them on our tax returns. The 5 year rule applies to us as we never lived in them. :nice1

[Moorf]

I'm still confused - I rented out my flat for over 10 years and only lived in it for the last 3 months we lived in NZ as a half-way house to moving here... then I rented it again while in NZ until selling it 2 yrs ago... so am I liable or not?

[Paul]

I'm still confused - I rented out my flat for over 10 years and only lived in it for the last 3 months we lived in NZ as a half-way house to moving here... then I rented it again while in NZ until selling it 2 yrs ago... so am I liable or not?

You could be Moorf if you returned within 5 years to live in UK, as you would have sold the flat when you were non Uk resident so would not be subject to Uk CGT. As I don;t believe that is a real issue for you can't see you have any issues to worry about.

It would only be if you were looking to live back in the Uk you MAY have an issue with the mixed use of the flat . As Jo Jo correctly points out if you have lived (and can prove you lived) in the property at any time of ownership, the last 3 years would not be included when time apportioning the capital gain (ie 7 years would be classed as a rental property and subject to CGT and 3 years as your main residence and so not subject to PPR exemption). If you were looking to return to UK you would want to take advice lets put it that way!

Hope that helps

[Jo Jo]

Hi Moorf,

If you lived in the UK you would be liable given those circumstances. But as you are resident in NZ, and NZ doesn't (yet) have CGT, then no, you're probably not liable. I have been given to understand by my tax accountant in the UK that even if I sold my flat (in the UK) in 10 years time I wouldn't be liable for CGT as my tax would be assessed under NZ law, so the amount I owed would be assessed under NZ law. (But HMRC in the UK would tax me for CGT if I moved back to the UK within 5 years of selling the flat). Hope that makes sense!

It's probably best to speak to a tax accountant here, though. I can recommend Martin Riley of Sterling Tax Services: http://www.sterlingtax.co.nz/ He's based down in Christchurch.

Jo Jo

[Moorf]

Fab info - thanks v. much all :nice1

[James 1077]

I'm still confused - I rented out my flat for over 10 years and only lived in it for the last 3 months we lived in NZ as a half-way house to moving here... then I rented it again while in NZ until selling it 2 yrs ago... so am I liable or not?

This is a hard one but a good tax accountant should be able to argue any liability down.

This is because PPR is a strange relief in that your flat probably became your principal property in the three months that you lived in it. The previous 10 years would attract letting relief as well.

If HMRC decided to ask any questions then get in touch with a tax accountant in the UK to deal with it on your behalf but if they don't then don't worry about it!

If they are going to open an enquiry then they'll normally do it by 31 Jan of the year after your tax return was due - although if you put it in late then there other rules but generally it won't be longer than 15 months after submission.