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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am intending selling a flat I own in New Zealand, I bought

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I am intending selling a flat I own in New Zealand, I bought it in 2003 and lived in the flat. I came back to the UK in 2009 and have decided to remain. I am a UK citizen and own the flat jointly with my wife who is a NZ citizen, are there tax implications?

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Take a look at HS283 HERE for information on the main residence and CGT. These rules apply equally to a non-UK property which has been the main home of the owner.

The gain is calculated by taking the disposal proceeds and deducting the purchase price, the cost of any improvements and the costs of purchase and sale (legal fees, survey fees, stamp duty, selling agent fees etc) to arrive at the gain. As the property is jointly owned, the gain will be split between the two of you.

The sum of the gains for the period that you occupied the property and for the last 18 months of ownership should be be exempt from CGT. If the property was let, you will each be entitled to letting relief of up to £40,000. Take a look at Examples 4, 5, 8 and 9 in HS283 for information on the gain calculations.

There are two rates of CGT on residential property, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you sell the property. Take a look HERE for more information.

As your wife is non-UK domiciled, she could choose to be taxed on the remittance basis (see section 9 HERE) and so long as she doesn't bring her share of the gain into the UK, she would not pay CGT in the UK on it until such time as she did bring the gain in. However, be aware of the remittance basis charge (see from paragraph 9.29 HERE)

If any CGT is payable in New Zealand on the gain, this will be deductible from any CGT liability you have in the UK under the terms of the UK/New Zealand tax treaty.

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

After calculating the part of the gain that is not covered by private residence relief and letting relief as applicable, you are left with the non-exemt gain. An individual can make tax free gains of £11,100 tax free in any one tax year. Only any balance is charged to CGT.

I have to go out for a while but will be back in about 30 minute to answer any follow up questions that you may have.

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