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bigduckontax, Accountant
Category: Tax
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If I am one of five in a partnership which owns a farm

Customer Question

hello - if I am one of five in a partnership which owns a farm in New Zealand, how can I best protect my share when the farm is sold? i live in UK and have been here over 7 years now.
i understand the UK can tax my capital gains from the farm?
the farm was originally held in a trust but changed to a partnership in 2012. Would the CG be taken based on the valuation in 2012? The property has actually devalued since then
thank you!
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You could protect your interests by appointing a NZ solicitor to act on your behalf and look after your position. You are correct in your surmise regarding the UK tax treatment of any capital gain. However, any gain made on the disposal of agricultural land would be entitled to Entrepreneurs' Relief and taxable at a flat rate of 10% as opposed to the normal 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. The gain would be based upon the difference between the original acquisition price plus costs and improvements and the net selling price. If this results in a loss then this may be offset against any other capital gains made in the same year and any balance carried forward. Furthermore, under the Double Taxation Treaty between the UK and New Zealand a gain can only be taxed in one jurisdiction. This is achieved by means of tax credits, the sum deducted by one country being allowed as a tax credit against the liability in the other. The Treaty does not protect you from differences in rates of taxation. I do hope that my reply has been of assistance.