Inheritance and sale of a property in Croatia and moving money to UK

brampty

Hello,

This is nothing bound to happen very soon, but I'm still interested in getting as much as information as I can.

I live in the UK, but I am supporting someone who has moved to Croatia to "live out the rest of their years" several years ago. The person in question owns her house, and upon her death I will inherit the house. I have no intention of keeping the house, as I will sell it and buy a house in the UK.

I will pay inheritance tax in Croatia, and I will later on pay the necessary tax upon the sale of the property, and once it's all done I will move the money to UK.

The Croatian counterpart is not troubling me. However, I'm finding it hard to find out if I am liable to pay any tax once I transfer the money to UK? I'm aware that things will most likely change post-Brexit, but I am wondering how it would play out if it happens before.

Of course, any suggestions and/or information are most welcome, thanks in advance!

00ec25

brexit won't alter much

in a nutshell, in respect of UK tax
a) you will not pay any when you inherit the property as it is not you who is liable to inheritance tax, it is the estate of the dead person, and it appears they have no connection with the UK any longer?

b) if you sell the property a long time after you inherit it then (and only then) you may become liable to UK Capital Gains Tax on any gain in value between what is was worth when you inherited it and what you actually sold it for because you would then be the owner selling it in your own name. You have a separate CGT allowance which may mean your gain is reduced to nothing all depends on the values at the time

brampty

Thanks for the reply!

I don't know if it changes anything, but the person I will inherit the house from has no connection to UK whatsoever, as she has lived in America for 90 years or so, and she bought a house in Croatia which will then end up being mine. She has never lived in UK, and I don't live in Croatia, but I will then own that house in Croatia for a brief (hopefully!) amount of time until I sell it.

Pennywise

Assuming your're UK tax resident and domiciled, you'll be liable to UK capital gains tax on the profit you make, i.e. difference between selling price and the value upon death (probate value for IHT). You aren't liable for UK IHT as it's the deceased's estate that is liable, which will depend on whatever equivalent there is for IHT in Croatia. You may be liable to some kind of sales tax in Croatia, but that's nothing to do with the UK. Your UK side of things is actually pretty clear and simple. It's Croatian tax you need to be researching, both for whatever equivalent death tax they have (similar to UK IHT) and whatever equivalent property taxes they have (similar to UK CGT).

brampty

The Croatian side is fairly straight forward, and have already researched it (inheritance tax with a 5% discount per year of care) and a property sale tax. Seems like UK side is pretty straight forward as well, which is good to know, thanks!

agrinnall

Although it may not have any impact directly on you (unless you are the executor) I would be very surprised if there are no US taxes to pay, given the desire of the IRS to tax people with any connection to the USA at all wherever they now live.