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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Just a quick question re Capital gains Tax in the UK on the

Customer Question

just a quick question re Capital gains Tax in the UK on the sale of an overseas property - We purchased a property 10 years ago in Spain and total costs were about 500,000 Euros.we took out a mortgage to help pay for this. We sold in 2014 for 294,00 Euros - can i check please that in taking account of costs associated with the sale i can also deduct an outstanding mortgage of 180,000 euros and so only count the proceeds as essentially the profit we received after paying costs and mortgage?
this is for a UK tax return.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. You never include the mortgage in the calculation of a capital gain. The mortgage is either part of the original funding/purchase price (ie the cost of the property so why would you count that part of the purchase price represented by the mortgage twice?) or it was raised to buy something else (why would that be deductible?). If you raised money via a mortgage whether that mortgage was secured on the property or not to improve the property, then the cost of the improvements is taken into account along with the original purchase price but not the mortgage. I hope this helps but let me know if you have any further questions.