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Capital Gains Tax on foreign rental property
Comments
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purdyoaten2 said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1148476/SA106_2023.pdf
"Box 51 Adjustments to Capital Gains Tax If the adjustment is intended to reduce the amount of Capital Gains Tax payable, put a minus sign in the shaded box in front of your figure. You may need to put a net adjustment in box 51 if: • your capital gain has Foreign Tax Credit Relief..." But SA106 also seems to include it.
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El_Torro said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
As for the divorce, they split their assets 50/50. The market value of the property was calculated in 2015 (I don't have that figure to hand but we do have that figure) and that figure was used as part of his 50% of the assets.
One more question: Does the fact that the property was not rented out for a significant period of time relevant? Especially since his parents lived there rent free for roughly 13 years. Or is this information irrelevant?purdyoaten2 said:Dazed_and_C0nfused said:The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
And they will presumably need removing from any eligible expenses??That 25K Euros is part of the 84K in expenses.As Jeremy has outlined, this is not a straightforward return.
https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-capital-gains-tax-civil-partners-and-spouses-2021
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Jeremy535897 said:El_Torro said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
As for the divorce, they split their assets 50/50. The market value of the property was calculated in 2015 (I don't have that figure to hand but we do have that figure) and that figure was used as part of his 50% of the assets.
One more question: Does the fact that the property was not rented out for a significant period of time relevant? Especially since his parents lived there rent free for roughly 13 years. Or is this information irrelevant?purdyoaten2 said:Dazed_and_C0nfused said:The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
And they will presumably need removing from any eligible expenses??That 25K Euros is part of the 84K in expenses.As Jeremy has outlined, this is not a straightforward return.
https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-capital-gains-tax-civil-partners-and-spouses-2021
As for the disposal, they were separated for a few years before the divorce so I guess technically speaking it shouldn't have been a no gain no loss transaction. However neither party paid any CGT on the transfer. What does this mean? Is his wife liable for some of the CGT?
Once we have the correct calculations for the exchange rates involved and put the right calculations in the right fields on the self assessment form it sounds like there's not much else to consider.0 -
Jeremy535897 said:purdyoaten2 said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1148476/SA106_2023.pdf
"Box 51 Adjustments to Capital Gains Tax If the adjustment is intended to reduce the amount of Capital Gains Tax payable, put a minus sign in the shaded box in front of your figure. You may need to put a net adjustment in box 51 if: • your capital gain has Foreign Tax Credit Relief..." But SA106 also seems to include it.Capital gains – Foreign Tax Credit Relief and Special Withholding TaxBoxes 33 to 40If you’ve paid tax in a foreign country on a gain and you want to claim FTCR, fill in box 33 and boxes 37 to 40 (in UK pounds) as appropriate. Do not fill in boxes 34 to 36.
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[Deleted User] said:Jeremy535897 said:purdyoaten2 said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1148476/SA106_2023.pdf
"Box 51 Adjustments to Capital Gains Tax If the adjustment is intended to reduce the amount of Capital Gains Tax payable, put a minus sign in the shaded box in front of your figure. You may need to put a net adjustment in box 51 if: • your capital gain has Foreign Tax Credit Relief..." But SA106 also seems to include it.Capital gains – Foreign Tax Credit Relief and Special Withholding TaxBoxes 33 to 40If you’ve paid tax in a foreign country on a gain and you want to claim FTCR, fill in box 33 and boxes 37 to 40 (in UK pounds) as appropriate. Do not fill in boxes 34 to 36.0 -
Jeremy535897 said:purdyoaten2 said:Jeremy535897 said:purdyoaten2 said:Jeremy535897 said:The situation is potentially rather more complex than suggested. The first task is to establish the sterling equivalent of the pesetas that the house cost when it was bought. At least half of the base cost will be based on this figure. Sterling equivalents of the costs of purchase, and any enhancements reflected in the value of the property at the date of sale, will need to be established too.
The next step is to establish whether the disposal by his ex-wife of her share of the property was a no gain no loss transaction, or whether it was treated as being at market value at the time. This will determine whether the acquisition cost is simply the sterling equivalent of the price paid when it was bought, or whether half of it is based on that figure, and half on the sterling market value in 2015.
The UK-Spain double tax agreement will allow a deduction of Spanish tax from the UK tax liability, but cannot result in a refund. Box 51 of SA108 is where to enter foreign tax credits.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1148476/SA106_2023.pdf
"Box 51 Adjustments to Capital Gains Tax If the adjustment is intended to reduce the amount of Capital Gains Tax payable, put a minus sign in the shaded box in front of your figure. You may need to put a net adjustment in box 51 if: • your capital gain has Foreign Tax Credit Relief..." But SA106 also seems to include it.Capital gains – Foreign Tax Credit Relief and Special Withholding TaxBoxes 33 to 40If you’ve paid tax in a foreign country on a gain and you want to claim FTCR, fill in box 33 and boxes 37 to 40 (in UK pounds) as appropriate. Do not fill in boxes 34 to 36.
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Clear as mud!0
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Jeremy535897 said:Clear as mud!0
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