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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We are selling 2 x homes in Florida used as a holiday

Customer Question

We are selling 2 x homes in Florida used as a holiday lettings for 10+ years. Sale funds are around 1 million $US.
There is no U.S.$ capital gain as we are selling for what we paid for them.
However because of large exchange rate movements there will be a large UK£ capital gain.
We are using the entire funds to buy another single holiday letting home in Europe.
Is there any way we could claim business asset rollover relief or entrepreneurs relief if we are buying another letting business?
I know that Furnished holiday letting as a business only applies to the EU area- but can this be classed as a "property business" albeit overseas?
Thanks
Peter Chapman
Submitted: 6 months ago.
Category: Tax
Expert:  TonyTax replied 6 months ago.

Hi.

I'm afraid that there are no provisions that make business asset rollover relief available to rollover gains made on the disposal of non EEA property let as holiday homes into the purchase of another holiday property, albeit in the EEA. The property has to to be let in the UK or the EEA and comply with the furnished holiday let rules to be able to access business asset rollover relief. Even if the properties were owned by a company and you sold your shares (the business asset in such a case) you would probably not be able to claim as the business is primarily that of letting property which successive UK governments have always seen as an investment business as opposed to a trading business. It does seem unfair especially if you have been heavily involved in the running of the lets.

You may be interested to read about a tax case on rollover relief on let property here.

I hope this clarifies things for you but let me know if you have any further questions.

Expert:  TonyTax replied 6 months ago.

I have to go out for a while but will back in 30 to 40 minutes to answer any follow up questions you may have.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15751
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and 3 other Tax Specialists are ready to help you
Customer: replied 6 months ago.
Thanks for this Tony.
The amount realised in the US will be in $US dollars. As I am using these funds to buy a new home in Euros, at no time will it be converted to Sterling- straight from US$ to Euros. Will the capital gain be assesed in GBP still? In fact the funds will probably not even be remitted to the Uk , just sraight to a Euro bank. Obviouisly with yhe recent Brexit fall in the £ -Euro rate this could affect me significantly....
Thanks!
Expert:  TonyTax replied 6 months ago.

The gain will need to be disclosed in the UK using the relevant rate of exchange (US$ to UK£), regardless of the US$ being converted directly to Euros to fund the property purchase in Europe.

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