Capital Gains Liability on Sale of Overseas Property

hillabaloo

In 2003 we moved to Spain and bought a property there.  We repatriated in 2009. For the period 2003 to 2009 we were tax resident in Spain. Since then the property has been a second home.

We will be selling the property in the next year or so.

As the property was our principal and only residence up to 2009, would the UK tax authorities base tax on the gain from 2003 or the gain from 2009?

If the base is 2009, how is the value calculated?

Jeremy535897

Step 1: Convert the cost of the property into sterling at the date of purchase. Do the same for any acquisition costs and improvements.
Step 2: Convert the sale proceeds and selling costs to sterling at the date of sale.
Step 3: Calculate the capital gain (step 2 - step 1) in sterling.
Step 4: Apportion the gain between the period it was used as your main residence, plus the last 9 months of ownership, and the rest of the period of ownership. In your case, assuming a sale in 2024, you will have about 21 years of ownership, of which about 7 years will be exempt, so about two thirds of the gain is chargeable. Do the calculation in months. See https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2023
Step 5: Deduct any available annual exemption and losses from the gain.
Step 6: Calculate the tax. See https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances
Step 7: Deduct any eligible Spanish tax paid on the gain (up to a maximum of the UK tax).

The value in 2009 is irrelevant.

hillabaloo

Jeremy,

Thank you very much for your reply and the easy to follow steps. This is very helpful and good news.