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Sam, Accountant
Category: Tax
Satisfied Customers: 14153
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi Sam, my name is***** own a property in South Africa

Customer Question

Hi Sam, my name is***** own a property in South Africa - it is in mine and my brother's names jointly. We purchased the property in 2002, and m family lived in it rent free. Both my parents have passed away and we are now looking to sell the property. Both my brother and I have been permanently resident in the UK for a number of years - him since December 1999 and me since May 2001. I need advice on Capital Gains Tax, but as the source of funds for the house was South African I am guessing we will be subject to SA CGT and not UK CGT?
I should probably speak to aCustomerin South Africa!
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Thanks for your question and for asking for me.
I imagine there will be South African tax to consider on the sale, and you will need to seek advise on this in this country - but from a UK tax perspective, there could well be a UK tax position to consider.
Could you therefore advise
1) When did you and your brother arrive in the UK
2) Once the property is sold will you bring or spend this money in the UK
I can then advise further
Customer: replied 3 years ago.

He has been here since December 1999 and I moved over in May 2001.

We intend on bringing the money into the UK.

Expert:  Sam replied 3 years ago.
Thanks for your response
Due to the fact that will bring this money into the UK, then you will both have a capital gain liability here in the UK. However if you also have a South African liability, then he good news is that you can ask for the tax suffered in SA to offset against the UK tax liability- so you don't end up paying tax twice on the same money.
Here in the UK the capital gain is worked out as follows
The initial gain is the sale price less the purchase price.
From this initial gain, the costs to buy and sell (so any legal fees or estate agent fees or any other fees/charges) can be deducted from the gain, as can any costs for capita improvements, such as a new kitchen, bathroom etc.
Then what is left over has the first £11,000 exempt - as this is your annual exemption allowance (so you will each get this annual exemption of your share) and then whatever is left over, is charged capital gains tax.
In the UK we have two rates of capital gains tax, and how much you pay depends on your annual income.
If your annual income is less than £41865, then the difference between your annual income and £41865 will be charged at 18% and the remaining gain at 28%. But if your income is more than £41865 for the tax year of sale, then the gain will be liable all at 28%.
Then any SA tax suffered on the sale is then deducted from this tax bill.
You should both advise HMRC of the sale of this property, and then will report the information on a self assessment tax return (which then is issued to you) after the end of that tax year.
All figures should be calculated in sterling using the exchange rate at the appropriate date (HMRC exchange rates are on their website - I can provide a link if required)
Let me know if you have any follow up questions
Expert:  Sam replied 3 years ago.
Hi Stephanie
I hope you found the information useful - let me know if I can be of any further assistance