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Category: Tax
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Question is regarding owning UK properties while living

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Question is regarding owning UK properties while living abroad. This covers mainly CGT.Since 2008 we have lived abroad and are paying a mortgage on the property we now live in (house 1).We also own a house in the UK (house 2) which we used to live in and is now loan free. Since 2015 we started to rent this house out as the maintenance costs were becoming too much (we had been using it for visits back to London until then).Soon I will inherit a share in another property in the UK (house 3) which we are also planning to rent out.The question is how to best plan for Capital Gains tax in the future if I need to sell either in the future.
- Is it possible to designate either house 2 or 3 (i.e. UK houses) as our main residence even though we do not actually live in them at the moment?
- From which point in time would the tax threshold be calculated for CGT on either house 2 or 3 (for example is it from date of purchase, or date we moved abroad)?Thanks for your help!
Submitted: 8 months ago.
Category: Tax
Expert:  Sam replied 8 months ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

I am afraid you cannot designate one of these properties as your main residence as you are not physically in the Uk - however there may be relief due, so please advsie why you left the UK - for example was it due to a post with an existing Uk employer - and how long do you plan to remin abroad, and how many visits have you made back to the UK (and for how long) since 2015

Are you declaring rental income to HMRC?

The gain is always calculated with the sale price less acquisition price to form the intial gain - from which releifs are considered to mitigate the gain arising, hence the questions above

Thanks

Sam

Customer: replied 8 months ago.
Hi SamThanks for your response.House 2 - I bought this in 2003 and lived in it full time until 2008. I then emigrated to work abroad (outside the EU) but continued to use it when we did trips home which were at least twice per year for a couple of weeks at a time. This was not an inter-company transfer and I became employed locally.House 3 - I will have part ownership of this likely from September this year.Let me know if you need any more information.Regards
Expert:  Sam replied 8 months ago.

Hi

Thanks for for your response

You advsie you lived in house 2 FULL TIME until 2008 - what happened between 2008 and 2015 when you emigated - and have you moved abroad permanently.

Have you declared rental income to HMRC?

Thanks

Sam

Customer: replied 8 months ago.
Hi SamWe used the house from 2008 - 2015 to stay when we returned back to London. Other relatives also used it from time to time.From 2015 we decided to rent it out and did so from July 2015. It's being rented through an agent and we will of course be declaring the earnings to HMRC (I understand we have until October 2016 to register it).Regards
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

No you should be registered now with HMRC as you are situated abroad and unless you have agreement to operate under the NON resident Landlord scheme then tax should be deducted by the managing agent and paid over to HMRC quarterly. So you should have registered as soon as the rental income began. Please rectify this as a matter of urgency. Please refer to your managing agents who should know this!

However back to the Capital Gain position - as you seem to have been treated as Not Resident since 2008 - then your capital gain will arise just from any gain made from 06/04/2015 to the date of sale (due to changes of legislation) link here re those changes https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

So make sure you get a valuation for the original property as at 6th April 2015.

So the longer you hold onto the proeprty the greater the gain to consider - but as UK citizens you will still be entitled to annual exemption allowance (currently £11,000)

Let me know if I can assist further

Thanks

Sam

Customer: replied 8 months ago.
Hi SamThanks very much for your answers.I will contact the agent today and find out what the status is with regards ***** ***** It's a well known agency so I imagine they have gone through the correct procedures, but will confirm anyway.For the CGT part, thanks for clarifying. I will get a valuation based on the 06/04/2015 price so I have this for future reference. What is the best way to do this - maybe land registry sold prices?Regards
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

No get a solid valuation - estate agents are able to provide post valuation (in this instance get a couple) as are the district valuers office (whose valaution would be solid) - see link here

https://www.gov.uk/government/organisations/district-valuer-services-dvs

Do let me know if I can assist - and do get onto the managing agents - as you say, one would hope they are following correct procedures and deducting basic rate tax from your rents to pay over to HMRC OR have applied for the Non Resident Landlord scheme

Do let me know if I can assist further - however it would be appreciated if you could take the time out to rate me for the level of service I have provided you with (or click accept)

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13778
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 8 months ago.
Fast and excellent advise. Was happy to answer small and more difficult questions.

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