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bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I own a holiday home in Portugal since 1990 which I would like

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I own a holiday home in Portugal since 1990 which I would like to sell, as I am non resident I appreciate that CGT will be charged on the increase in value from purchase to sale price. However I have been receiving conflicting information on the amount, I have been told that there is an 'inflation coeffecient' to adjust the amount to the inflation index by some whilst others dispute this, I have been told that if I reinvest the money in another Portugese property within 2 years I can reduce the bill by 50% on the sum reinvested, others dispute this. Can you offer any clarity on this matter ?
Submitted: 1 year ago.
Category: Tax
Expert:  Nicola-mod replied 1 year ago.

Hello,

Thank you for contacting JustAnswer.co.uk.

It was brought to our attention that you asked a legal question about Portugal, where we do not have active professionals. As much as we would like to assist you, we have to be honest and say that the best we can do is maybe to provide a legal Internet researcher who might be able to find your answer.

We realize that option is not ideal, and we always want to provide our customers with the best possible answer. At this time, we'd like to give you the option of leaving your question open. Keep in mind that you're never obliged to accept an answer that you're not satisfied with, and you can try it out before you accept. Or, we can close your question page for you, if you prefer.

Please let me know how you’d like to proceed,

Nicola

Customer: replied 1 year ago.

Any information or help would be appreciated.

thank you.

Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you. I will try this in the Tax category and in General for now.
Thank you for your patience,
Nicola
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your problem. Here is a general resume of Portuguese Capital Gains Tax (CGT) from Qunita Properties: 'On a sale of a property there is currently a capital gains tax to pay at a rate of 28% for non-resident individuals and 25% for companies (non-residents). This tax is calculated on the difference between the sales price and either the purchase or construction price of the property (if applicable) index linked or its first rateable value index linked whichever is the highest. It is important when building a property to make sure that you receive proper invoices from the builders of the amounts paid so that you have the possibility to offset these costs against capital gains tax payable when the property is sold. There are other costs that you can use to offset against this tax such as invoices of certain refurbishments made to the property in the past twelve years, taxes, notary and registration fees paid at the time of acquisition of the property, and the real estate agent fee.' Global Property Guide adds: 'For capital gains realized from fixed assets such as real property, only 50% of the capital gains will be taxable if the capital gains are reinvested in fixed assets such as real property during the year the sale occurred, the previous year, or within two years after the sale.' There is, however, a much more serious tax problem and that is UK CGT. If you sell and reinvest UK CGT will be chargeable on any gain. Roll over relief only applies to furnished holiday lettings and if your property is not so defined then the relief is not available. Under the Double Taxation Convention between the UK and Portugal any CGT paid in that country is allowable as a tax credit against any UK liability so you do not get taxed twice on the same transaction, but the convention does not protect you against differences in rates of taxation. UK CGT is at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. Under UK CGT rules you do have a Annual Exempt Amount of 11.1K to offset the gain. I am so sorry to have to rain on your parade.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3814
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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