CGT on selling property abroad

gabbro86

Hello everyone.

My girlfriend and I are Italian expats, permanently living and working in the UK.
She owns a house in Italy, which was gifted to her by her grandmother in 1999. The house is currently let.

She's looking to sell the Italian house and use the money for a deposit to buy one here in London. I know she will have to pay Capital Gains Tax here in the UK (money earned from selling houses is not taxed in Italy), but I have a couple of questions:

• Let's say she sells it for EUR 100k and it was valued at the equivalent of EUR 50k back in 1999. Will the 50k amount need to be recalculated based on inflation? Or just used as it is?
• Is there any way to get any relief on the CGT amount, maybe via gifts, or anything else?

Thanks in advance for your help

00ec25

gabbro86 wrote: »

[*]Let's say she sells it for EUR 100k and it was valued at the equivalent of EUR 50k back in 1999. Will the 50k amount need to be recalculated based on inflation? Or just used as it is?

no relief for inflation. The gain is the difference between acquisition and selling prices when converted in GBP at the respective date of acquisition and date of sale.

So there almost certainly will be an extra "gain/loss" caused by the currency movement between 1999 and now on top of the actual property value difference.

gabbro86 wrote: »

[*]Is there any way to get any relief on the CGT amount, maybe via gifts, or anything else?

if you were married to her, yes, but as you are not, then no, gifting would itself trigger CGT - after all the point is to ensure stuff is taxed when it changes ownership

gabbro86

00ec25 wrote: »

So there almost certainly will be an extra "gain/loss" caused by the currency movement between 1999 and now on top of the actual property value difference.

Ha, I hadn't thought about this. Thank you!

gabbro86

Two other questions...

• What would the difference be if we were married?
• When would she become liable for CGT? Is it when the house is sold, or when she transfers the money to her UK bank account?

00ec25

gabbro86 wrote: »

Two other questions...

• What would the difference be if we were married?
• When would she become liable for CGT? Is it when the house is sold, or when she transfers the money to her UK bank account?

married couples can gift things from one to another without triggering CGT, so she could make you a co-owner and not trigger CGT on doing that

obviously then when it is sold later on there are 2 owners each with their own personal allowance so the overall tax bill is reduced by a bit

but (huge but) you cannot get married, gift and sell all within the space of a few months as HMRC would then say the only reason for the gift was to avoid tax, and so "settlements legislation" would allow them to ignore the gift and treat her as still being 100% owner



the date for CGT is the date when the contract to sell the property becomes unconditional, that may or may not be the date you think of as the "sold" date as it depends on how Italian law works for property sales. (in the UK is the date contracts are "exchanged", not the date the sale "completes", but I have no idea how Italians do property

please also note very carefully, as you are both ex pats you may be treated as being Italian domiciled living in the UK, there are special rules for that situation - see here: https://www.gov.uk/tax-sell-property/selling-overseas-property

Cook_County

Did you ever live in the property? Did you at any time elect to claim the remittance basis so you already have mixed funds in Italy?

gabbro86

Thanks @00ec25!!

Did you ever live in the property? Did you at any time elect to claim the remittance basis so you already have mixed funds in Italy?

She never lived in the property.
Neither one of us ever claimed the remittance basis.

mangomusic

Can't find new thread button so posting this here

We bought some land in Sri Lanka in 2012 and sold in 2012 with a profit. However there are certain gray areas that I think my accountant is finding it difficult to navigate around.
It is impossible for foreigners to acquire freehold tenure in Sri Lanka. A crafty little back door way that accountants worked for a while was for foreigners to set up limited companies and then buy the land through the company and own that land as an asset. The cost for doing this was about $5000.00. and was the only way to own property or land. As well as this we had to pay a fairly hefty annual charge for accountancy, secretarial and book keeping fees as well as the the cost for the annual audit..
We have now sold the land and wonder what can be offset against our capital gains liability. If we had not set up the company in the first place we would never have been able to buy the land (and indeed be liable now for capital gains) It seems to me that this is a legitimate cost in the same way that conveyancing and survey fees can be offset against any liability.
At the same time the annual cost of running the company was about $1000 per tax year (although there was no financial activity in the company!) This was never offset against any uk liability on our uk tax return although we always sent a copy of the return to our accountant.. If, as we are liable for capital gains on the company, could we retrospectively get rebate on this company accountancy and audit fees in the same way as I can on my uk accountancy fees.
And what about travel costs in order to buy, manage and sell the land.
I understand that I have to pay capital gains on overseas propery but in order to own the property I had to conform to local laws and charges(which in turn engendered the tax liability that I am now faced with ),so surely these must be offset against capital gains liability as it certainly reduces profit that I will ever see . And if they are not then these costs which have wiped out much of the profit could end up making me worse off than if I had not bought the land which doesn’t make sense or seem fair practice.

sheramber

We bought some land in Sri Lanka in 2012 and sold in 2012 with a profit.

Are these dates correct?

Cook_County

From what has been described the property was owned by a UK resident company (UK resident because it is/was managed & controlled in the UK). The company owes UK corporation tax on its profits; with additional potential UK liability should the company distribute its profits. Has the company filed its UK corporation tax returns? If not, why not?