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Hi. I have a question about tax on donated property which

Resolved Question:

Hi. I have a question about tax on donated property which has been sold. I had ownership of a portion of a French property donated to me some time ago by my parents who also retained a share. At the time I had no other residence. No tax was paid at the time of the donation.

It has been sold, and the question I have is what tax, if any, should I pay on the amount I have received? I am currently under the impression that whatever tax was due was paid at source prior to distribution and so there is nothing to pay, but would like clarification. As a supplementary question, I need to know what to declare (if anything) and how I can declare it. I usually fill in an online tax form but know that there are some circumstances under which this is not possible, so wonder if this means I need to do a paper application.

Please let me know if you need further details. Ideally I will be looking to have something in writing confirming the answer.

Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question

I can answer through this platform - but we are not permitted to engage directly with customers, so nothing can be put in writing beyond this method. You would need to engage a local accountant who would be able to do this for you.
If you wish to proceed then

Please confirm that you are a UK citizen - as you do not indicate this in your question - you just state EU law, and if you wish a calculation to be made more information would be needed
1) The value of the property when you were transferred a share
2) What % share was transferred to you
3) the sale price
4) Whether you incurred any costs for selling, or any major capital improvements
5) Your usual annual income (to determine what tax rate is due on any gain)

Thanks

Sam

Customer: replied 2 years ago.


Hi Sam,


 


To answer some of your questions:


I am a UK citizen (taxpayer)


1. I believe it was EUR 76k


2. I received 37.5% of the proceeds of the sale price net of some fees (not sure what they correspond to). So property price was EUR 165k, fees 10k so net receipts = 155k. Amount received prior to other deductions was 37.5%*155k = EUR 58125, less deductions = 53789.36. However these percentages are backed out and do not necessarily correspond to the share of the property received


3. (see above)


4. Personally I did not pay for any improvements, but they were many done and were paid for by my parents. I'm not sure how this was accounted for in the disburtion.


5. I'm a higher rate taxpayer.


 


It sounds like you believe that some tax is due. My impression (as per my original email) is that given the transaction took place within the EU then tax paid in France meant that no tax should be due here. If this is mistaken then I'd like to understand why.


 


Thanks for your help,


Jerome

Expert:  Sam replied 2 years ago.
Hi Jerome

Thanks for your response and the additional information..
I am afraid that your belief that no tax would be due in the Uk, is incorrect, because as a UK taxpayer you are liable to tax on worldwide income, but any French tax suffered can be claimed as a credit against the UK tax position. So there is only additional tax to pay IF there is a shortfall on the UK tax position.

If you could come back to me and advise the amounts spent on capital improvements and selling fees - and the other figures in sterling then I can advise the capital gain position on your 37.5% share.

Thanks

Sam

Customer: replied 2 years ago.

Unfortunately that coincides with what I thought is likely to be the case but contrary to what others have been telling me. Your point about the French tax being claimed as a credit makes a lot of sense and helps me to understand the way double-taxation would be avoided.


 


Given at least one accountant has advised no tax is due it appears I need someone with specific expertise. Can you please clarify what expertise I should be looking for and whether there's a good (reputable, possibly local) place I can search for such an accountant? I'd be happy to seek your assistance but feel that there is probably more detail here than can be easily provided through this chat.


 


Thanks again for your help.

Expert:  Sam replied 2 years ago.
Hi

Thanks for your response

You just need to be looking for an accountant that has competencies in both
1) Capital gains tax
2) Foreign income

And I also concur that you are nest finding a local accountant to you, as we are not permitted to take up one to one via our affiliation with this site, so our answers, are only able to be given through this forum -

I would look for anyone ex HMRC or ACCA or AAT qualified as these all should have the relevant qualifications and expertise

Thanks
Sam
Sam, Accountant
Category: Tax
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