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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15763
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We are resident in Spain and own our property there worth

Resolved Question:

we are resident in Spain and own our property there worth about £100.000, we have a house in England which we rent out. We are moving back to UK to rent a bungalow and are selling our house there, the house is worth £230-£240.000 with a £90.000 interest only mortgage can you tell me what if any capital gains i will pay
Submitted: 5 months ago.
Category: Tax
Expert:  TonyTax replied 5 months ago.

Hi.

How long have you been living in Spain? Will you be selling your UK house before or after your return to the UK? How much did the UK house cost to buy? When exactly did you buy it (month and year)? Did you move in as soon as you bought it? When exactly did you move out (month and year)? Was the property let right away and has it been let or available for let ever since? Is the UK property jointly owned and has it always been so?

Customer: replied 5 months ago.
we have been living in Spain for 12 year, selling after, £137.000, bought on the 17th Apr 2003, yes we moved in as soon as, we moved out May 2004 , shortly after and been available ever since, yes jointly owed and always been so
Expert:  TonyTax replied 5 months ago.

Thanks.

Leave this with me while I draft my answer.

Expert:  TonyTax replied 5 months ago.

Do you want me to finish my answer before a call? There is quite alot to it as the rules have changed for non-UK residents.

Customer: replied 5 months ago.
not sure whats happening can you just send e-mail with answers
Expert:  TonyTax replied 5 months ago.

I'm typing my answer now. You will get an email when I have posted it.

Expert:  TonyTax replied 5 months ago.

If you sell the UK property after you return to the UK, say in November 2016, the UK CGT position for each of you individually will be as follows:

Total period of ownership to November 2016: 164 months

Period of owner occupation: 14 months

Period of letting: 150 months

Gain: £51,500 (£240,000 - £137,000 / 2) This can be reduced further by deducting legal fees (purchase and sale), survey fees, stamp duty, selling agent fees etc)

Exempt gain: £10,049 (£51,500 / 164 x 32 (14 months of occupation + last 18 months of ownership)

Letting period gain: £41,451 (£51,500 / 164 x 132 (150 - last 18 months of ownership)

Gross Non-Exempt Gain: £41,451

Letting Relief: £10,049 (lesser of £40,000, £10,049 and £41,451)

Annual CGT Exemption: £11,100

Net Taxable Gain: £20,302

CGT @ 18% or 28% or a combination of the two rates depending on the level of your income in 2016/17. Look here to see how to calculate your CGT rate.

Non-UK resident individuals became liable to CGT in the UK on gains made on the sale of UK residential property with effect from 6 April 2015. However, if it is beneficial to you, you can use the 5 April 2015 value of the property as your cost which will obviously be higher than the original purchase price of £137,000, so long as you sell the property before you resume living in the UK. Take a look at the notes here and here for more information. The potential downside to a sale before you return to the UK is that you may have to pay CGT in Spain. You would need to seek local advice on that as I'm not an expert on the Spanish tax system.

I hope this helps but let me know if you have any further questions.

Customer: replied 5 months ago.
is the Net taxable gain split between my wife and I so what would be the tax payable on those figures we are both retired and the only income is the house rental and our state pensions
Expert:  TonyTax replied 5 months ago.

The net taxable gain is £20,302 each. As I said in the opening to my answer " the UK CGT position for each of you individually will be as follows:".

The CGT cannot be more than 28%, ie £5,684.56 each. Some of your respective net taxable gains will be taxable at 18% but how much will depend on when you return to the UK and how much your respective incomes are between the date you return to the UK and 5 April 2017, assuming you sell the property in the current tax year.

Customer: replied 5 months ago.
why was it you tried to take £43 4 more timesfrom my credit card after the initial £43 was taken
Expert:  TonyTax replied 5 months ago.

I haven't tried to do anything. I'm an independent contractor and simply answer tax questions. Contact customer services at just answer to resolve your problem.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15763
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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