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Where Taxpayers and Advisers Meet

CGT on gift of foreign property?

NonDom41
Posts: 42
Joined: Tue Nov 28, 2017 3:03 pm

CGT on gift of foreign property?

Postby NonDom41 » Fri Jan 25, 2019 3:12 pm

I am a non-domiciled person in the UK and file my income tax returns of my worldwide income on the arising basis. I own a flat outside of the UK and would like to give it as a gift to my son. He lives with me in the UK. This flat has nothing to do with the UK and has been in my possession long before I came to the UK (bought in 1981).

I think this gift transfer is UK-tax free because I have been resident for only 14 years and thus am still considered non-domiciled (I know after 15 years I would be deemed domiciled).

However, is this gift subject to capital gains tax even though I am under the 15-year time period?

AdamS93
Posts: 238
Joined: Tue Sep 26, 2017 6:28 pm

Re: CGT on gift of foreign property?

Postby AdamS93 » Fri Jan 25, 2019 5:42 pm

Yes, as a UK resident, you are subject to UK CGT on worldwide assets, regardless when you bought them.

Depending on where the property is situated, there may be tax to consider in that country first but without further information, there is not much more to add.

NonDom41
Posts: 42
Joined: Tue Nov 28, 2017 3:03 pm

Re: CGT on gift of foreign property?

Postby NonDom41 » Sun Jan 27, 2019 2:44 pm

Thank you, Adam593

The flat is situated in Germany and it falls within the German gift tax allowance; i.e. there is no tax due in Germany.

It was bought in 1981 for GBP 100,000.00 and the value today is approx. GBP 220,000.00. This means the difference of GBP 120,000.00 would be subject to UK-capital gains tax. Subtracting the UK-allowance of GBP 11,700.00 gives a taxable amount of GBP 108,300.00. If we apply 20% CGT, 21,660.00 would be due (I know there are different rates depending on your overall income but let us ignore this here).

Is the rough calculation above correct? Can anything else be deducted that will lower the CGT?

darthblingbling
Posts: 294
Joined: Wed Aug 02, 2017 9:09 pm

Re: CGT on gift of foreign property?

Postby darthblingbling » Sun Jan 27, 2019 9:26 pm

18 and 28% for residential property.

There likely is some bespoke planning you could do depending on your circumstances and how the flat was previously used. Recommend you get some specialist advice.


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