[Brit Guy]

If we cannot possibly sell our house in the UK prior to moving (becoming resident) in NZ, does that mean that when we are able to sell it, we will have to pay tax when we bring our money into NZ? We have more than one property also, which is one of the reasons we cannot sell prior to moving (capital gains in UK).

Also, if we dont 'bring' the money into NZ untill a more favourable exchange rate, are we then taxed on the difference??? any way round all this??

[willsken]

I'm sorry I don't have an answer to your question. I just wanted to say that we are in the same position as you. We did speak to an accountant but he didn't really help very much. I'm quite tempted to sell, move and hope for the best! (Probably a very bad idea!!) :roll

[Andrew]

I have limited knowledge and think that Capital gains only applies if you are resident in UK and have not reinvested money from the sale of property within 7 years of that sale.

[Wannaway]

If you sell your "principle private residence" ie the main home you live in, you should pay no tax either in UK or NZ (unless the house is on a big plot - over 0.5ha I think). As for investment properties, if you sell them when you are not resident in the UK but when you are NZ resident then again you should not pay capital gains tax in UK or in NZ. However, if you return to the UK to take up UK residence within five years of selling leaving the UK, you may get a clawback of the UK CGT.

If you have cash deposits held in a currency other than NZ$, when you exchange that money then yes technically you have to declare the foreign exchange gain or loss for NZ income tax puposes. Might be best to have an example. Lets say you have GBP100,000. When you enter NZ to take up residence the exchange rate is, say NZ$2.75 to the pound. So. if you converted at that point you would have NZ$275,000. But say you hang on for a few months and the exchange rate goes to NZ$3 to the pound (if only!) and you exchange at that point. Then you will receive NZ$300,000 and you have made a foreign exchange gain of NZ$25,000. Technically you are required to disclose this on your NZ income tax return and pay tax on it. Equally if the exchange rate fell to NZ$2.50 to the pound, then when you changed up you would only get NZ$250,000. This translates to a loss of NZ$25,000, which you can claim as a tax loss. The key is the movement in the exchange rate at the date you enter the country to take up permanent residence to the date you actually change up themoney.

[tigerlily]

Wannaway- does this tax on the difference in exchange rates only apply to cash on hand? Not to say investments of other types such as bonds or retirement accounts which are invested in the stock market?

And am I reading you correctly that if I wait a year to sell my house (in America in my case) that NZ will not tax the money when I bring it over? (As a side note, the US can't because I will have lived in the house for 2 out of the last 5 years that I owned it.)

[Wannaway]

Tigerlily,

Sorry for dealy in responding, been busy at work in the run up to Christmas. Personally held cash deposits are "financial arrangements" and therefore subject to the exchange rules I mentioned before. Shares are not but bonds may be - depends on what the bond is.

Interests in retirment funds and the like are subject to a different regime, called the "Foreign Income Fund" or FIF rules (but the "financial arrangements" rules may apply to assets held in the funds - it is complicated!). New migrants are generally exempt from the FIF rules for a period of 4-5 years after becoming permanent residents in NZ. The rules are ferociously complicated (I work in tax and find them incredibly complex!) and I would therefore recommend you consulting a tax advisor when you get to NZ, especially if those funds have a value in excess of NZ$50,000 and definitely if they have a value over NZ$100,000 - the cost of getting it wrong on your NZ tax return could come as a nasty shock. Interest on underpaid tax is currently charged at 13.08% - I know, that's loan shark rates! Plus the tax penalty regime in NZ is draconian and, as Kiwis would say, has little "wiggle room".

There is no capital gains tax as such in NZ, so if you sell property any profit is free from tax in NZ (they do have rules that tax gains on assets "acquired with the purpose of resale"), but if the asset in question was your home then this proviso should not apply.

[tigerlily]

Thank you very much Wannaway! Sounds like there is at least a bit of time to get things organized once we move.

So if my husband contintues to work for an American university in it's online program, we're going to be hit with that FIF aren't we? Oh gads.