Capital gains tax on property in Australia - double taxation treaty

Hi there, I have an investment property in Australia (where I’m a citizen) which I am planning to sell. I bought the property for AUD 900,000, will sell for about AUD 1.3mio, so a gain of AUD 400,000. I will be liable for 32.5% capital gains tax in Australia (so AUD 160,000) as it’s not my primary residence, and I’m not a tax resident there. I’m trying to understand if I will be liable for any UK CGT on the property. When I calculate my UK tax payable in the online calculator (ignoring the AUD tax paid), it tells me my UK tax bill would be £62,720 (equivalent to AUD 119,000). I know there is a double taxation treaty; does the fact my CGT bill in Australia will be more than in the UK, mean I shouldn’t expect to pay any UK CGT on this sale? Thank you

Hi,

If you are resident in the UK at the time of the disposal, then you will be subject to Capital Gains Tax on any gain arising from the disposal. To work out if there is a gain, you will need to convert the acquisition costs, using an exchange rate in operation at that time. You will also do this conversion at the time of disposal using an exchange rate in operation at that time. The difference will be your gain.  

In a self Assessment tax return, you would declare the gain on SA108 and again on SA108, where you can claim up to 100% of the tax paid in Australia against the UK gain.  

Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal. For your convenience you can find exchange rates here:

Exchange rates from HMRC in CSV and XML format

Older rates can be found here:

Exchange rates

You are free to use any of the supplied rates or one of your own choosing.  

There is a capital gains calculator which may be of some help below:

Tax when you sell your home

Thank you.