emigrating and capital gains tax

willsken

Hi everyone, new to the forum:D

We are emigrating to New Zealand at the end of the year and I could really do with some advice on rental properties we have.

We are selling everything (our home and 2 rental properties) now and I looked at the relevant Inland Revenue advice sheet, but it isn’t clear. If I am out of the country for 5 years, it says I don’t have to pay capital gains tax. What I am not clear on is can I sell the properties now or will this only apply if I sell them once we are in New Zealand having left the UK.

Thanks very much in advance!

Nic

Cook_County

Its quite simple. You can only sell them if you are not ordinarily resident at any time in the tax year of sale.

On the assumption that you are in full time employment in NZ and do not visit the UK that will mean after 5 April 2007 and you not coming back (if you ever do) until after 5 April 2012.

willsken

Thanks for the reply

OK, so that rules out just selling up now and leaving the country if I don't want the taxman after me! :rolleyes:

Another thing I read on this forum is that there is no limit to the amount of time a house has to be your main residence. So can anyone tell me if I am allowed to do this..... Sell my home first, move into one of the rental properties and claim it as my main residence, then sell it after my home has already sold. This way when I sell it, I won't be liable for capital gains as it will now be my main residence.

Or what are the chances of him catching me if I just......

travelbug_3

hi willsken
just to say
you could not have chosen a better country to emigrate to
my daughter ,son in law and children emigrated 18 months ago to new zealand
and they have all settled down well ,love the country and the new zealanders,there is no way they would come back to the uk to live after living there
it's such a better way of life
although we miss them ,we know they will have a great life in NZ
good luck with your move

silvercar

Sell my home first, move into one of the rental properties and claim it as my main residence, then sell it after my home has already sold.

You can do this, you will need to genuinely live in it for at least a few months. You will them get exemption for the last 3 years of ownership. so if you owned it for 6 years you would pay tax on half the gain (less letting relief, tapering relief, CGT allowance of 8k etc)

willsken

silvercar wrote:

You will them get exemption for the last 3 years of ownership.

Is the 3 years a standard time..... we have owned this house for only 2 years. Does this mean after living in it for a few months we will have to pay nothing?

Ian_W

Yup. Here's a HMRC helpsheet:
https://www.hmrc.gov.uk/pdfs/2003_04/capital_gains/ir283.pdf

itsakidsworld

Not an answer here, another question really on the same topic.

Regarding leaving the country, if you had buy to let properties and also your own home, do you have to sell everything to avoid paying capital gains tax? Then remain out of the country for at least five years?

I was told that if you sold the buy-to-lets but still had your own home the taxman can recover CGT as you still have residence and so you still are a tax payer?

Cook_County

the test here is one of ordinary residence. In the view of the Courts presence in the UK is not required to remain ordinarily resident here. However Revenue practice is to regard becoming employed full-time overseas as sufficient to break ordinary residence.

Therefore full-time employment overseas for a period including at least 5 full UK tax years is recommended. You will of course need to be aware of tax in your new country of residence. NZ does not have CGT which makes it ideal for this sort of planning.

willsken

Another thing I find confusing:o

One of the properties has never been rented out. We bought it as a shell of a place that needed everything doing to it. I have been told that the only expenses we can off set are where we have added to the property and not expenses for replacing the kitchen bathroom wiring etc. This seems very unfair as by doing all this work we have improved the value of the house significantly.

canny_yorkshireman_2

did you not realise that buying a property for rental and increasing its value is subject to capitol gains tax on the profit or added value that you give it in effect you are working for the government one of the main reasons i have never touched this sort of investment