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bigduckontax
bigduckontax, Accountant
Category: Tax
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I'm selling my family home in Russia, I owned this property

Customer Question

I'm selling my family home in Russia, I owned this property for 15 years and was leaving there constantly before moved in UK. Do I need to pay tax in UK from selling this property?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
Before I can give you a full answer I must know if you own an UK property and, if you do, when did you acquire it?
Customer: replied 3 years ago.

I did acquire the property in UK in 2010

Expert:  bigduckontax replied 3 years ago.
Presumably, you did not elect as to which of your properties Private Residence relief (PRR) would be applicable? I will proceed on that assumption.
Your Russian residence was you sole or main domestic residence up to 2010. If you sell in the current year then only a small proportion of your gain would be subject to Capital Gains tax (CGT). You work out in months the total ownership time, the total occupation time (plus 18 as in the last 18 months of ownership you are deemed to be resident therein even if you are not). Deduct one from the other. Let us say for 30 of the 180 months of ownership you were in residence, then 30/180 of the gain, say 17%, would be subject to UK CGT. You have an Annual Exempt Allowance (AEA) of 11K to offset this. Furthermore, if the Russian residence was let out than Lettings Relief up to 40K instead of AEA may be allowable also. Remember only the gain is taxed and the gain is calculated by using the purchase price plus any improvements, but not repairs, and taking that from the net selling price. You may well find that there is no CGT to pay after all that palava.
This is an UK tax advice site, but from what I can glean from KPMG's web site you will escape Russian taxation anyway viz:
'"“Capital gains” are subject to income tax. In particular, taxation of proceeds from the sale of property depends on the tax residence status of an individual in the year of sale, the type of property sold and the property ownership period prior to sale.
For example, disposal by a tax resident individual of property (except for securities and derivatives) held for three years or more does not create any taxable income for the individual (i.e., the total amount of sale proceeds is exempt from tax).'
In any event any tax levied by Russia would be allowable as a tax credit against any UK CGT under the Double Taxation Treaty between the UK and Russia designed to ensure that the same income foem is not taxed in both jurisdictions.
I do hope I have shed some light on your position.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.