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Where Taxpayers and Advisers Meet

How is UK CGT on foreign property sales calculated?

MarkAgata
Posts:2
Joined:Wed Jul 20, 2022 3:57 pm
How is UK CGT on foreign property sales calculated?

Postby MarkAgata » Wed Jul 20, 2022 4:04 pm

I have a property in Hungary that I got in 2019, which I am planning on selling now.
I got this property at a value of 33mil HUF which was around £95K in 2019.
I expect to sell it for 45mil HUF, which is around £100K today (HUF weakened a lot against GBP in the past 3 years).

Which of the following two scenarios apply?
1. Calculate my gains in HUF and then exchange it to GBP at the rate today. This would be a gain of 12mil HUF, which is around £27K, which would be £7500 UK CGT due (minus the Hungarian CGT equivalent).
2. Calculate my gains in ‘at the time’ GBP equivalents. This way I would have only made a gain of £5K, and hence no UK CGT due, as that is within my personal allowance.

Question: do I have any CGT to pay?

PS: I will also speak to a solicitor, but I would like to gather some initial feedback from the community.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: How is UK CGT on foreign property sales calculated?

Postby darthblingbling » Thu Jul 21, 2022 12:26 pm

You need to use spot rates along with rules on how we calculate gains. I.e., option 2

However, the tax you paid on the disposal is typically available in full as a potential credit, regardless of whether Hungary uses a different method to calculate gains.

MarkAgata
Posts:2
Joined:Wed Jul 20, 2022 3:57 pm

Re: How is UK CGT on foreign property sales calculated?

Postby MarkAgata » Thu Jul 21, 2022 1:37 pm

typically available in full as a potential credit
- you mean the double taxation relief?

(The issue is that the CGT equivalent in Hungary is only 16% vs the 28% in the UK. So even if I paid Hungary in full, there may still be a liability in the UK, depending on the two scenarios. )

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: How is UK CGT on foreign property sales calculated?

Postby darthblingbling » Thu Jul 21, 2022 4:15 pm

Yes.

Albeit it may be moot as option 2 is the correct option. Just make sure the gain is calculated under UK rules, but I'd assume it's just proceeds less purchase less some typical allowable expenses.


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