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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4883
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, me and my brother had inherited a flat in Istanbul, Turkey

Resolved Question:

Hi, me and my brother had inherited a flat in Istanbul, Turkey from our father many years ago. We're now about to sell the flat and I'm planning to transfer to funds to UK. Will this be liable to tax? We've already paid an inheritance tax in Turkey. Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise -

Is it a second home or do you live in the property as a main residence since inheriting the flat?

Are you UK nationals and resident in the UK for tax purposes?

Many thanks
Customer: replied 2 years ago.

Hi I do live in UK since the last 9 years and am British citizen now. I never lived there since moving to UK and didn't have any rental income from the property. Hope this helps.

Expert:  taxadvisor.uk replied 2 years ago.

Oz, thank you for your prompt reply.

The property is deemed as a second home (investment) for capital gains tax purposes and any gain arising from sale of it would be chargeable to capital gains tax, I'm afraid.

You will claim gains annual allowance of £11,000 from the gain and the balance would be taxed at 18%, 28% or a combination of both depending on your income including the gain in the year of gain.

The gain would be the difference between the value at the time of transfer of property to you and the selling price.

If this gain has suffered any foreign tax in Turkey, then you would be able to make foreign tax credit claim against it.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Thanks for your speedy response. Is there a way to minimise the tax impact i.e. by investing the fund to buy a property, or cash ISA etc.?

Many thanks!

Expert:  taxadvisor.uk replied 2 years ago.
Oz, thank you for your reply.

Unforntunately, you can't mitigate the chargeable gain by investing in cash ISA or another property, I'm afraid.

If the property is in your and your brother's name then both of you would be entitled to gains allowance of £11,000 each. You would pay CGT on your share of the gain.

I hope this is helpful and answers your question.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4883
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.
Customer: replied 2 years ago.

Thanks. After your feedback, I've made a lot of research. Still not sure that this overseas property needs to be taxed, as I don't own a house in the UK, thus it is not a 2nd/investment home and all the time, my mother was living there, so I didn't have any financial gains. If I had a main home in the UK and I would be selling it, it would be exempt from CGT, so why my home overseas is liable to CGT, if I don't own a home in the UK?

Appreciate if you could have another look...

Many thanks,

Ozgur

Expert:  taxadvisor.uk replied 2 years ago.
Ozgur, thank you for your reply.

To be exempt from CGT from sale of property, it has to be

- your only home or your main residence;
- you have used it as your home and nothing else
over the whole period of ownership

The fact your mother was living in it and that you were not living in that property as your main residence, any gain from sale of it would be chargeable to capital gains tax, I'm afraid.

I hope this is helpful.
Customer: replied 2 years ago.

Thanks, appreciated. In that case, I'll rethink, whether we should sell it. Sorry for troubling you.

Many thanks.

Expert:  taxadvisor.uk replied 2 years ago.
My pleasure.

Best wishes

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