My rental property in the UK had to be sold because of a binding financial agreement at the end of my marriage. I’ve paid UK CGT and the lump sum is now in Australia. Do I pay tax on it (on the whole amount) and at what rate?
I’m hoping that I am calculating the amount wrong as, otherwise, my settlement looks very dire.
Hello there @Cornishnat.01,
Yes, there may be capital gains tax. This is because you have sold an asset for a potential profit. The math depends on a lot of factors though.
If you're an Australian resident, the sale of overseas assets are treated the same as if you sold them in Australia.
Because you have paid foreign tax already, you may be able to claim a foreign income tax offset in your return.
The CGT does not apply to your divorce settlement. It applies to profit you gain from selling assets wholly or partly under your ownership. If you owned the asset partially, you only pay CGT in relation to your percentage of ownership.
If you owned the asset for more than 12 months and are an Australian resident you may be entitled to a CGT discount.
The rate of tax you pay on a capital gain is still determined by the individual income tax rates. You will need to calculate your capital gain first and determine if you are eligible for a discount. You can then get a rough idea of what income bracket you may fall into.
Hello there @Cornishnat.01,
Yes, there may be capital gains tax. This is because you have sold an asset for a potential profit. The math depends on a lot of factors though.
If you're an Australian resident, the sale of overseas assets are treated the same as if you sold them in Australia.
Because you have paid foreign tax already, you may be able to claim a foreign income tax offset in your return.
The CGT does not apply to your divorce settlement. It applies to profit you gain from selling assets wholly or partly under your ownership. If you owned the asset partially, you only pay CGT in relation to your percentage of ownership.
If you owned the asset for more than 12 months and are an Australian resident you may be entitled to a CGT discount.
The rate of tax you pay on a capital gain is still determined by the individual income tax rates. You will need to calculate your capital gain first and determine if you are eligible for a discount. You can then get a rough idea of what income bracket you may fall into.
so if I have an income of $63k per annum and I sold the property for profit of $110k am I really looking at a tax figure of $40k?
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