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Sam, Accountant
Category: Tax
Satisfied Customers: 14189
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My situation: I'm an ex***** *****ving in Dubai. My dad is retiring

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My situation:
I'm an ex***** *****ving in Dubai. My dad is retiring next year.
Together we're looking at forming a business partnership to invest in property, with the aim of letting the property(/ies) out initially.
What technicalities are there to forming a partnership where one partner is non resident? What capital gains taxes would we be liable to if we sold the properties?
Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.
Can you advise that you Dad lives in the UK and the properties will be situated in the UK.
Will you just purchase properties and refurb them and let them (if so, you cannot be a partnership - in the trade sense, but will have joint lettings income)
Let me know where Dad and the properties will be and I can advise further
Please also advise whether this will be 50:50 split.
Customer: replied 2 years ago.

Hi Sam,

Thanks for your quick reply.

My dad lives in the UK and the properties will be in the UK.

That's correct - we'll purchase, refurb and let out. Some properties will be sold at a later date.

This will be on a 50:50 split.



Hi Stephen
Thanks for your response and the information asked for.
Both of you then will need to register with HMRC for self assessment - when the rental income commences, each of you will declare your half share of the rents and half share of expenses.
Your Dads share will be added to any other UK income he has (state or ex employer pension etc) and for you, although an ex pat - at this time are still entitled to UK personal allowances, which will allow the first £10,600 of the rents to be tax free (assuming you have no other UK income)
Then when you come to sell properties you both will have a capital gain liability, you Dad, as he is UK resident and UK, because as from 06/04/2015 - the rules regarding capital gains and non resident individuals has changed.
Capital gains would be - sale of property value, less purchase value which forms the initial capital gain.
From this initial gain you can deduct the costs to buy and sell (so legal fees stamp duty etc) and also the costs of any MAJOR improvements (such as new kitchen, bathroom etc)
Then with the amount left over, the first £11,100 is exempt (annual exemption allowance) and any remaining gain liable to capital gains tax.
Capital gain rates are 18% or 28% or a mix of both, and the rates you pay are determined your by usual UK income.
So if a higher rate taxpayer as annual income is in excess of £41785 - then the gain (after the exemption allowance) would be at 28%
If your annual income is less than £41785 - then any unused basic rate band - would allow the equivalent of the gain to be charged at 18% and any remaining gain at 28% (so annual income of £30,000 then £11.795 unused basic rate band - so first £11,795 of gain at 18% and any remaining gain at 28%)
Let me know if you wish me to expand any further, but if you have all the information you need - then it would be appreciated if you could rate the level of service I have provided (or click accept) so Just Answer credit me for my time
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