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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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CGT on mortgaged foreign property: put simply, acquired in

Customer Question

CGT on mortgaged foreign property: put simply, acquired in Switzerland 2005 on 100% CHF mortgage for CHF 200,000. Sterling value that date £90,000. Sold 2015 CHF300,000 sterling value that date £200,000. Mortgage CHF200,000 paid off. Actual cash gain is CHF 100,000 , in sterling 2015 £65000 remitted to UK but what's the taxable gain for UK CGT? Is it £110,000 despite the 'loss' arising on CHF currency mortgage? Or can that be offset, or claimed as a separate capital loss?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question.Your gain is based on currency values converted into Sterling at rates prevailing when the transcation took place for CGT purposes. Based on your figures the gain for CGT purposes is £110,000 less your gains annual allowance of £11,100 for tax year 2015-16.Loss on currency mortgage can not be offset against this gain, I'm afraid. 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 1 year ago.
Ok, so if I had for the sake of argument bought Swiss francs in 2005 and sold them in 2015 (rather than this which is effectively the reverse) the gain would not by that logic have been taxable?
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.Currency gains are chargable to CGT. The exception to this is covered in HMRC manual CG78315 herehttp://www.hmrc.gov.uk/manuals/cgmanual/cg78315.htmA gain on the disposal of foreign currency acquired by individuals for the personal expenditure outside the United Kingdom of themselves and their family or dependents is not a chargeable gain. This includes expenditure on the provision or maintenance of a residence outside the United Kingdom. You acquired an asset which has realised a gain both in real terms and due to exchange rate fluctuations. I hope this is helpful

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