Inheriting property from abroad

nukebox

Hi there,

I'd really appreciate some help with below.

10 years ago, my dad passed away and left the family home in Sri Lanka to me and my sister. It was split equally, but as part of his will, my mother had the right to live there as well. Since then, my mum has been living in the house, with other financial support from my sister and I.

We are considering selling the house and moving my mother over here now. Can anyone help me understand what the UK tax implications are in bringing the proceeds of the sale to the UK?

Does it fall under income tax or inheritance tax or neither! Both my parents were domociled in Sri Lanka.

Any questions, please do ask.

Thanks in advance

margaretclare

Does your mother really want to move, not only move house but move to a strange country where - apart from your sister and yourself - she'll know no one, won't know the language or be familiar with the culture?

What does she really want to do - she's the one with the right to live there for her lifetime, isn't she?

nukebox

margaretclare wrote: »

Does your mother really want to move, not only move house but move to a strange country where - apart from your sister and yourself - she'll know no one, won't know the language or be familiar with the culture?

What does she really want to do - she's the one with the right to live there for her lifetime, isn't she?

Yes, she wants to move. It's not a strange country for her, she's lived her in the past, has loads of friends and other family here, not to mention her children and grandchildren. Language and culture is not a problem.

I reliase my original post may have sounded like it's an arbitary descion being made by my sister and I, but it's not.

dzug1

Certainly no income tax, and any inheritance tax should have been paid at the time you inherited it.

Capital gains tax possibly - as it wasn't your personal private residence.

Whether Sri Lankan law has anything else to say on the matter I've no idea

nukebox

dzug1 wrote: »

Certainly no income tax, and any inheritance tax should have been paid at the time you inherited it.

I presume you mean inheritance tax in Sri Lanka or are you saying that when inheriting property aboard (even with someone still living in it), that UK inheritance tax laws apply? I think even if it did, the amount inherited by my sister and I individually, falls below the IHT thresholds.

dzug1 wrote: »

Capital gains tax possibly - as it wasn't your personal private residence.

Hmm, that's interesting. Would that be CG tax on the increase of the house value since we inherited it? In which case, that's probably not a problem since the prices have fallen (yup, over there too).

dzug1 wrote: »

Whether Sri Lankan law has anything else to say on the matter I've no idea

Sure - thats fair enough. Thanks very much for your reply.

dzug1

nukebox wrote: »

I presume you mean inheritance tax in Sri Lanka or are you saying that when inheriting property aboard (even with someone still living in it), that UK inheritance tax laws apply? I think even if it did, the amount inherited by my sister and I individually, falls below the IHT thresholds.


Hmm, that's interesting. Would that be CG tax on the increase of the house value since we inherited it? In which case, that's probably not a problem since the prices have fallen (yup, over there too).


Sure - thats fair enough. Thanks very much for your reply.

1. I was thinking (not too clearly as it turns out) about UK IHT. I assume the person you inherited it from was resident in Sri Lanka? If so forget UK IHT.

2. Yes - on the increase in value, if any, between inheritance and sale

nukebox

dzug1 wrote: »

1. I was thinking (not too clearly as it turns out) about UK IHT. I assume the person you inherited it from was resident in Sri Lanka? If so forget UK IHT.

2. Yes - on the increase in value, if any, between inheritance and sale

Thanks.

1. Yup, dad was resident in SL. All that side of things are done and dusted.
2. Ok - I guess one less thing to worry about.

Cook_County

You will have CGT on either the sale or the remittance - depending on if you are domiciled in the UK and if not if you are claiming the remittance basis.

nukebox

Cook_County wrote: »

You will have CGT on either the sale or the remittance - depending on if you are domiciled in the UK and if not if you are claiming the remittance basis.

I'm domiciled in the UK - so I guess I'll have to look at CGT. But, if the house value has falled since I inherited it, then is there actually any CGT to pay? It's a "loss" for me.

dzug1

nukebox wrote: »

I'm domiciled in the UK - so I guess I'll have to look at CGT. But, if the house value has falled since I inherited it, then is there actually any CGT to pay? It's a "loss" for me.

Correct, no CGT - it is on the GAIN (if any, and less allowances), not the whole sum.

You can also carry the loss forward for future offset