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Where Taxpayers and Advisers Meet

CGT on UK Property for US Resident

kramxel221@hotmail.c
Posts:1
Joined:Wed Aug 06, 2008 3:03 pm

Postby kramxel221@hotmail.c » Mon Apr 21, 2003 3:29 pm

I've seen several responses that would indicate that as a US resident I would not need to pay UK CGT on my UK property if I sell it. That given, checked up the UK/USA Double Taxation Convention and article 13, para 1 states 'Gains derived by a resident of a Contracting State that are attributable to the alienation of real property situated in the other Contracting State may be taxed in that other State'

Not a lawyer, but this seems to explicitly state that such transaction are taxable events in the country in which they occurred. Am I off base?

DF
Posts:35
Joined:Wed Aug 06, 2008 3:02 pm

Postby DF » Tue Apr 22, 2003 1:40 am

You are almost right.....

The treaty states that a US resident MAY also be taxed in the UK in respect of gains arising on UK property.

Broadly, if you are not UK resident under UK domestic legislation then you are not liable to UK capital gains tax (which is a residency based tax).

A tax treaty exsists to provide relief and cannot impose an additional tax charge that does not already exist.

Therefore if you are not UK resident then you are not liable to UK capital gains tax. As a US resident, the gain would be reportable for US tax purposes.

Hope this helps.

David

demetris
Posts:95
Joined:Wed Aug 06, 2008 2:18 pm

Postby demetris » Tue Apr 22, 2003 6:35 am

The general view is that a tax treaty cannot override to impose tax where the domestic law does not imose it. The Revenue have disputed that in the past though.

Demetris Savva BA FCCA
http://www.tax-accounting-london.info


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