[Bogs]

what are the main advantages of doing the 7 years here?
Would it be a useful thing to have with regard to CGT on investments that I want to cash in...say 25 years from now when living back in the UK?


another thing....I bought a property in the UK 3 months before coming to HK...If I want to sell that property will I get done for CGT from the UK Inland revenue? I understand you have to live in your primary property for a certain amount of time to avoid getting done by CGT, that right?

cheers, Bogs

[PDLM]

7 years gets you Permanent Residence not (Chinese) citizenship. But you would be non-resident in the UK for tax purposes long before that so I don't think there are any advantages of getting PR from a UK tax point of view.

[cendrillon]

I'm not sure of the UK tax laws, but my guess is they'll be pretty similar to Australia. In Australia many people think if they live in a property for 1 year or some period they wont have to pay CGT.

That's not really true, generally you'll be hit for CGT pro-rata based on the amount of time you live in it vs. the amount of time you rent it out.

I know in Australia you're allowed to rent a property out for up to 6 years and still claim it as your principle residence if you're living overseas, or moved interstate for a job. Not sure what the case is in the UK.

Also in Australia you're liable for CGT on property even if you're non-resident because property is considered to have a 'significant connection' with Australia. Stocks, even Australian ones, can be sold free from CGT if you're non-resident, but unfortunately for property you have to pay.

Anyway, that's just the Australian case, the UK laws might vary.

[cendrillon]

Another note, when you retire and sell your investment property, you'll have to put the money into some other cash generating asset anyway. So why sell at all?

Just keep the property, in 20 years the rent will be 4 times what it is now, the mortgage will be mostly payed, and you have a nice stable constant source of cash-flow to fund your retirement.

The only reason to sell in my view is if you can do it CGT free, and then shift the money into stocks and live in HK. That way you get your dividends tax free.

But if you're going to cop CGT on your property (say 30%) and shift it into stocks and live in HK (no tax on dividends), then you're probably better keeping the property and paying 30% on the rental income, and live where-ever you like. The tax you pay works out the same: 30% of your principle, or 30% of your rental income.

[Sleuth]

Also, I think that you have to appear in HK once a year to maintain your status.

[mfc]

being non resident from UK makes you CGT free for everything, not just the home you lived in. Time to load up on your property methinks.

You should check the rules, I believe you have to stay away for 5 years to be CGT free for assets you bought when you was in the UK and CGT free immediately for anything you bought after you became non resident.

[cendrillon]

That's quite interesting MFC. So are you saying that even for property non-residents do not have to pay CGT?

In Australia non-residents don't have to pay CGT on stock, however for property it was explicitly states that non-residents (even non-citizens) are liable.

I guess they want to make Australia attractive for foreign investment (in businesses via stock) but they don't feel the need for too much foreign investment in the property market (which is already pretty overpriced as it is).

What's the situation like in the UK?

[HKNewBi]

CGT rules in the UK are far from straight forward. A lot depends on the case you make to the UK IR. There are some downloadable leaflets on their site I would suggest you read.

If you gain permanent residency you can vote in HK and can't be deported.

[cendrillon]

"If you gain permanent residency you can vote in HK"

Well that's certainly useful

[discobay]

Yep it doesn't get more democratic than right here in Asia's WC. If you think Bow Tie is severely lacking in leadership just wait until Mrs Bow Tie chimes in at the end of his reign.