oversea property CGT

myself1999

Hi experts, I am from Hong Kong and has been working in London since 3 years ago.
10 years ago when i have just graduated from uni, my parent requested me to help them to buy a property in China. it is under my name but they paid everything. We have never let this property out. it is only a holiday flat and my parent will stay there occasionally (once a week).

During these 10 years, i have been working very hard and being very strict to myself not to spend unnecessary money . Finally, I have save enough for deposit to buy my "first home" in London for me and my wife.

I know when i buy a flat in UK. It is my second property. I would need to pay the supplement stamp duty and in the future if i want to sell the property in china. i will need to pay the CGT.

my questions are:
1) In the future if I want to sell the property in London in order to buy a better one. Can I get CGT relief as it will be my main resident?
2) before buying a property in London. Is it possible to get any relief to give away the china property back to my parents as I have never let it out?

If there is not much i could do, i will just accept the consequence of not saying no to my parent 10 years ago and pay everything i should.

Thank you

00ec25

1. yes - you will get Private residence relief (PRR) for the time you lived in the property as your main home. Presumably that would cover the entire time you owed it, so no CGT to pay when you sell that London property

2. How much is the property worth?
have you ever lived in it yourself ?
I note you say your parents use it (once per week is hardly occasional use, it is regular use)

you need to understand that got CGT purposes, the tax is applied to a Beneficial owner, not to a legal owner.

The bottom line is - do you expect to get all / a share of the money from the sale of the Hong Kong flat? If yes then you are without doubt a beneficial owner and will have to pay CGT.

On the other hand, if you do not get any of the money, it seems at first glance that your parents can be shown to be the beneficial owner since they paid for it in full and if they get all of the money from the sale of it then you would have no CGT liability at all.

if you have no beneficial ownership then the fact you are the legal owner is irrelevant for both CGT and higher rate SDLT on the purchase of your London property

at the end of the day, there are possibilities, but you need to consider the costs of professional advice versus the tax at stake?

myself1999

Thank you so much for your reply!
it worths ~1,000,000 CNY when we bought it 10 years ago
and now it worths ~2,500,000 CNY.

I did live there myself like 10 times a year before i start working in UK 3 years ago.
yes if my parent want to sell them . I will definitely give all the money back to them.

I do want to ask for professional advice if anyone could recommend. I find it a little bit hard to find a good one here though google.

Thanks again for your help

Cook_County

You are of course not domiciled within the UK so even if you are the beneficial owner you can elect to claim the remittance basis for the year of gift. As you have not been UK resident for 7 years, this election would only cost you your UK personal allowance.

myself1999

Thank you so much! that could be a way to cut tax. wondering if you know whether elect to claim the remittance basis will have negative effect on ILR application? Many thanks