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Will I Pay CGT on My UK Property?

Question I bought a house in 2001 and lived in it until 2005, at which time I moved to Australia for work. Since then the property has been rented out, but now I am selling the property. I do not own a property in Australia. Do I need to pay capital gains tax?

Arthur Weller Says:
If you are now still resident in Australia, and therefore non-UK resident, then you will have no UK capital gains tax (CGT) to pay now. If, before you return to become UK resident, you will have been non-UK resident for five complete consecutive tax years then any sales made during those five years will completely escape UK tax. If when you return to become UK resident again you will not have been non-UK resident for five complete consecutive tax years, then the CGT that you do not pay now at the time of the sale will be payable on your return.

However, even without all the above, it is possible that you have no UK CGT liability. From 2001 to 2005 the property was your principal private residence (PPR). Therefore those years are exempt from CGT. Because it was your PPR, the last three years of ownership (2007-2010) are also exempt from CGT. The middle two years (2005-2007) remain, but during those years the property was rented out, so you are eligible for the letting exemption, which could reduce the gain attributable to those two years by as much as £40,000 (depending on the PPR relief claimed for years 2001-2005 and 2007-2010). After that comes the CGT annual exemption (currently £10,100), so it is quite possible that you do not need to pay CGT.

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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