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Do we need to pay CGT on a house sale in Italy?
Idonex
Posts: 105 Forumite
Hi,
Many years ago when my great Aunt died (Italian & Italian resident) she left her flat in Italy to my dad in her will.
My dad (English and perm resident in the UK) has now decided to sell it, as we don't use it enough and it's getting too expensive to maintain (old apartment block with charges through every orifice).
My question is, are we liable for UK CGT? Italy has no CGT, instead they have a system called Imposta Comunale sugli Immobili and we pay a certain amount each year based on the value of the property.
Seems a bit out of order having to pay 18% of the sale to the UK government on a property that was inherited. That's another thing..CGT is usually paid on the profit you made above what you paid for the property? So in this case we pay 18% on the WHOLE amount since we didn't buy it, and therefore it's all profit? The flat isn't worth much, so if we do need to pay 18% CGT it may be better of keeping it and just paying tax to the Italians, where the property actually is....
Thanks!
Many years ago when my great Aunt died (Italian & Italian resident) she left her flat in Italy to my dad in her will.
My dad (English and perm resident in the UK) has now decided to sell it, as we don't use it enough and it's getting too expensive to maintain (old apartment block with charges through every orifice).
My question is, are we liable for UK CGT? Italy has no CGT, instead they have a system called Imposta Comunale sugli Immobili and we pay a certain amount each year based on the value of the property.
Seems a bit out of order having to pay 18% of the sale to the UK government on a property that was inherited. That's another thing..CGT is usually paid on the profit you made above what you paid for the property? So in this case we pay 18% on the WHOLE amount since we didn't buy it, and therefore it's all profit? The flat isn't worth much, so if we do need to pay 18% CGT it may be better of keeping it and just paying tax to the Italians, where the property actually is....
Thanks!
0
Comments
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It may depend on whether your Dad has non-dom status or not. If he is non-dom then he only pays tax on money earned or brought into the UK. If he isn't non-dom then he is taxed on world wide gains. That's the sum of my knowledge on non-doms, I'm sure the front pages of the newspapers explain more
If you are liable for CGT tax in the UK then it is based on the gain he has made on the property. If he inherited it, then the starting point is the market value at the time of probate. So you need to find its value at the time your Dad inherited it.
Your Dad also has a CGT allowance of £10,100 if not used elsewhere. He could transfer half of it to his spouse (if he has one) before sale, to get two lots of CGT allowance.
The UK has tax treaties with most countries, I guess Italy would be one, where you are given an allowance for the tax already paid in another country. So if your CGT bill was £6,000 but you had already paid £3,000 in Italian CGT, you would only have to pay £3,000 here.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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