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CGT for overseas property

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Newbie

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Hi there, I Bought property in 1991 as principal place of residence in Hong Kong and didn't rent it out until now.. I Got PR visa in 2007 and moved to live in Australia with family since 2011, but I still get back to live in Hong Kong property once or twice a year for few weeks, I didn't disconnect the gas, water, electricity and the bills still under my name. I bought another property in Australia in 2014 as PPOR and live in there with family until now and didn't rent out any part of it to earn income. If I sell my property in Hong Kong, do I need to pay CGT? If yes, what is the cost of the property? Should it be base on the market value of the property on the date the PR visa was approved? Thanks.
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ATO Certified Response

Former Community Support

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Hi @Blaw

 

As an Australian resident, you need to declare your world wide income. This means that if you sell a property overseas, you need to report it in your tax return.

 

Generally, your main residence is exempt from CGT. Since your Australian property is now your main residence and you've rented out your Hong Kong property, you may be subject to CGT if you decide to sell it.

 

As you bought your Hong Kong property before you become an Australian resident, you are taken to have acquired it at the same time you became an Australian resident. Keeping a record of the value of your property at this time will help you work out your capital gain or loss.

 

Generally, CGT is calculated from the date you started renting the property until the date you decide to sell it. However, there may be further factors to consider based on your situation. If you'd like to receive a more tailored response you can contact our Early engagement team or contact a registered tax agent for advice.

 

NicolaC

 

3 REPLIES 3

Most helpful response

ATO Certified Response

Former Community Support

Replies 2

Hi @Blaw

 

As an Australian resident, you need to declare your world wide income. This means that if you sell a property overseas, you need to report it in your tax return.

 

Generally, your main residence is exempt from CGT. Since your Australian property is now your main residence and you've rented out your Hong Kong property, you may be subject to CGT if you decide to sell it.

 

As you bought your Hong Kong property before you become an Australian resident, you are taken to have acquired it at the same time you became an Australian resident. Keeping a record of the value of your property at this time will help you work out your capital gain or loss.

 

Generally, CGT is calculated from the date you started renting the property until the date you decide to sell it. However, there may be further factors to consider based on your situation. If you'd like to receive a more tailored response you can contact our Early engagement team or contact a registered tax agent for advice.

 

NicolaC

 

Newbie

Replies 1

Hi NicolaC,

Thank you very much for answering my questions.

But as I mentioned, I DIDN'T rent out the property in Hong Kong since the time I bought it in 1991.

As you said CGT is calculated from the date I started renting the property until the date I decide to sell it. Does it mean that I may not need to pay CGT in this sense?

Thanks and awaiting your kind reply.

ATO Certified Response

Former Community Support

Replies 0

Hi @Blaw,

 

The important part to take away from @NicolaC’s post is.

 

“As you bought your Hong Kong property before you become an Australian resident, you are taken to have acquired it at the same time you became an Australian resident. Keeping a record of the value of your property at this time will help you work out your capital gain or loss.”

 

You can only claim one property as your main residence at one time. If you choose to treat your Hong Kong residence as your main residence then you will be required to pay CGT on your Australian property when you decide to sell.

 

Alternatively you can claim your Australian property as your main residence so you would be required to pay CGT on your overseas residence from when your Main residence changed in 2014 on your overseas property.

 

Luke S