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Where Taxpayers and Advisers Meet

CGT on overseas property

asterixtrav235
Posts: 3
Joined: Tue Mar 24, 2020 9:51 pm

CGT on overseas property

Postby asterixtrav235 » Tue Mar 24, 2020 10:05 pm

hi, will try to keep this as short as possible, a week ago or so I've sold a property in Romania, the property was bought as an investment in 2015 and was rented out since then.

I've called around and checked HMRC's website but I keep hearing all kind of answers, from "don't worry, there's nothing to pay" to expecting a huge tax bill,

the property was bought with a mortgage and a minimal deposit paid, at the time GBP was very strong, as you know though this isn't the case today due to the current crisis etc., can I just transfer the funds into the UK without having to fill a self assessment form? I'm a romanian citizen, all my family is there and I visit regularly but have been living and working in the UK for about 8 years.

If however I would have to register for self assessment and submit one, does furnishing count as an "improvement" cost since the property was a new build and was empty at the time (no kitchen, bathroom, etc., had to be bought by myself) ? also the seller is my friend, there might be a case that he sold the property below the market value to help me (since I had a fixed amount that I could put forward for the minimum deposit), does HMRC take that into account and how would one go about figuring out the market value?

wamstax
Posts: 1915
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT on overseas property

Postby wamstax » Wed Mar 25, 2020 7:04 pm

Given that you bought this property as an investment and was let out your capital gain will be calculated by converting the foreign sale proceeds into GBP£s and the foreign purchase costs into GBP£s and deducting the latter from the former. The ensuing capital gain less the annual exemption limit (assuming no other disposals in the year and full amount c£12k available ) will be chargeable to tax as an addition to your other income and taxed at 18% (if any of the basic rate band left and up to the upper limit) and otherwise at 28%

Hope this helps
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
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asterixtrav235
Posts: 3
Joined: Tue Mar 24, 2020 9:51 pm

Re: CGT on overseas property

Postby asterixtrav235 » Wed Mar 25, 2020 8:10 pm

thank you, it does, but what exchange rates will be used for this? on both the purchase and the sale, there were multiple transfers made on different days (not next day), the GBP fluctuated a lot during this time.
Also, the dealings were in the local currency and the price stated was in EUR (converted at the time of signing the sale contract), does this make any difference at all?

PS: I’ve also spent some time in the property at the end of 2019, some 3-4 months or so, I’ve noticed I could potentially get some relief because of this but how is this actually calculated?

wamstax
Posts: 1915
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: CGT on overseas property

Postby wamstax » Thu Mar 26, 2020 12:25 am

the exchange rates would be the GBP£ equivalents of the cost price at the date of disposal - which would be at the date of exchange of contracts. However you might also have to consider exchange gains if you were converting currency at the time of payment.

As regards your living in the property and presumably considering Main residence relief your quality of occupation would be the operative consideration and unless you were occupying it with occupation with the necessary quality of permanence your temporary occupation would not usually be sufficient to qualify for main residence relief (and presumably letting relief). It would also be considered relevant whether you had elected to treat that property as a main residence and whether you had another property that you were occupying as a main residence.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

asterixtrav235
Posts: 3
Joined: Tue Mar 24, 2020 9:51 pm

Re: CGT on overseas property

Postby asterixtrav235 » Sat Mar 28, 2020 7:41 pm

incredible... I do regret even thinking about moving my investments in the UK now, I guess I could have kept that part there and not be bothered.

on the exchange rates, would that be a rate set by HMRC or is that the one at the bank I received the payment? I haven't done the currency exchange on the day so there's no reference for that on my end..

as for the main residence relief, assuming I would qualify for it, would that be based on the amount of time I owned the property? and is that taken into account as 12 month or is there a specific period?

just trying to figure out what would I be liable for here... and whether it even makes sense to think about trying to sell the second property.


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