Overseas property & UK tax

curly_cabbage

Back in 2005 we brought a property in Spain, very small mountain house with a bit of land for 60K (Euro's) with the intention to move out their, after buying and spending a lot of time out their doing it up it became apparent that this was not what we were looking for so in 2009 we decided to sell. As the global recession really hit Spain and the rest of us we have not had any offers, last month we were offered 35k (Euro's) which we have now excepted, which mean's we will have made a loss of 25K (euro's). My question is as I have made a loss will I be liable for any tax here in the UK when we bring the money back? All local taxes will be dealt with in Spain when we exchange paperwork.

I have tried googling the info but, can't find anything that suite's our situation. Any help or if you could advise of where best to look next is very welcome.

00ec25

I assume you are Uk resident for tax purposes and therefore you are indeed liable for tax on all your worldwide financial activity.

But, unless you are already required to submit a SA tax return then based on the size of the numbers you list, the fact you have made a loss means you do not compulsorily have to declare this to HMRC.

However, it may actually be in your interest to declare this loss to HMRC because once you have registered that loss then it will always be available to offset against any CGT gains you may make in future years. Therefore it may actually keep you out of having to pay CGT if you ever make a profit on something else.

To reiterate, declaring your loss now is your free choice, assuming, as above, you are not already required to SA. Obviously you must keep a complete paper trail showing where the money you bring into the UK has come from and especially the fact it originates from having made a loss on a property sale.

curly_cabbage

Many Thanks for your advice :beer:

Cook_County

Do remember that the loss in Euros is irrelevant as you need to calculate in Sterling using spot rates for the dates of purchase and sale.