income/CGT whilst abroad

chappers

Have posted this on here as well as part of it is relevant to tax

My Brother-in-law has been in Bermuda with his girlfriend for over a year now and has just got himself a job there he intends to stay there for probably another two years until his girlfriend finishes the third degree she is doing and then they may move back here or not depending on what happens in between.

My questions are this he has been renting his flat out for a year and stupidly hasn't informed Nationwide, the freeholder or his insurers, does anyone have any idea as to Nationwides general position towards letting, particularly as his mortgage deal has just come to an end. Would he be able to re-mortgage with any lender bearing in mind he is working in Bermuda, all be it for a British company, or would he be stuck with Nationwide, (not a problem as he is quite happy with what they have on offer, just the renting issue).

And secondly last year he filled in his tax return stating his income from his property but didn't claim any expenses such as his mortgage interest, agency fees etc. can he claim last years expenses back on this Aprils tax return.

Thirdly a question regarding CGT he bought this property two years ago and lived in it for a year whilst in this country, he has been renting it out for a year now and may do for a further two years would he have any CGT issues if say he sold it after owning it for 2,3,4,5 years having only lived in it for the first year and also what would be the implication if he came back and lived in it in year 5 for another year and then sold in year 6.



Cheers
Gareth

fengirl_2

1. he needs a financial advisor. If the tenants trash the place, he is not insured.
2. No, he needs to put in an amendment to last year's return.
3. If he sells the flat while he is not resident in the UK, there will be no CGT. If he sells while he is resident, the period in which he lived in it, plus the last 3 yrs of ownership are exempt. The gain relating to the let period is only taxable where it exceeds £30k.

chappers

cheers fengirl
Yes i am aware of the mortgage and insurance issues as i rent out a property myself , cheers for the other advice.

Murdina

there is a further point about letting out a flat when you live abroad. You should be registered under the non resident landlords scheme otherwise your tenant or your letting agent should be deducting basic rate tax from the rents. http://www.hmrc.gov.uk/cnr/nr_landlords.htm

he may also still get hit with CGT even if he sells while abroad. This applies because he owned the flat before he went abroad and is an anti avoidance provision designed to stop people going abroad for a while and saving CGT by selling assets while away.
Have a look at http://www.hmrc.gov.uk/manuals/CG1manual/cg26110.htm

Hope the links work OK.

chappers

cheers all helpful stuff will pas it on to him