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TonyTax
TonyTax, Tax Consultant
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Lived in Italy for past eight years owning a property there

Resolved Question:

Lived in Italy for past eight years owning a property there and rented out UK property during this time. Selling up in Italy and returning to Uk this year.
Will we have to pay any UK capital gains tax if we bring the sale monies in to UK.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Did you own the property in Italy before you left the UK eight years ago?
Customer: replied 2 years ago.


We bought the property about 9 months before we went to live there.


The time was used to renovate the property.

Expert:  TonyTax replied 2 years ago.
Thanks.

Has the property been your main home all the time that you have been in Italy?
Customer: replied 2 years ago.

Yes- uk house still rented out. Only visited UK for about 56 days each year.

Expert:  TonyTax replied 2 years ago.

Thanks.

Leave this with me while I draft my answer.

Customer: replied 2 years ago.

Many thanks.

Expert:  TonyTax replied 2 years ago.
Hi again.

The Italian property has clearly been your main home since you left the UK as you occupied it within 12 months of buying it and your UK property has been let. I'm also assuming that you didn't make an election for the UK property to be treated as your main home after you acquired the Italian property which it could not be after it was let in any event. A main residence election only works where there is more than one home available for your use. If you own two and one is let, you do not have more than one property available for your use.

In those circumstances, any gain on the sale of the Italian property will be exempt from Capital Gains Tax in the UK under the main residence rules which you can read about in HS283 here.

It really shouldn't matter whether you sell the property before or after your return to the UK so long as you sell it within 18 months of moving out (36 months for disposals by 5 April 2014). You will be free to bring the money into the UK with no tax issues to worry about. A belt and braces approach would be to sell it before you return to the UK. You will then also be covered by the fact that you have been non-UK resident for at least five full tax years which will exempt gains made on the sale of non-business assets after you left the UK and before you returned to the UK which you owned before you left the UK.

As a side point, assuming that you are a UK national, the fact that you may not bring money made from assets sales abroad into the UK does not preclude the gains from being taxable in the UK if you are UK resident when the disposals occur.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 2 years ago.

Many thanks for info- put our minds at rest.

Expert:  TonyTax replied 2 years ago.
Thanks and good luck in the future back in the UK.

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