Living abroad, selling UK residence - capital gains tax?

[Thud_Mcguffin]

Bit of a long shot asking this one....

I have been living in rented accommodation in Germany for the last 4 years due to work. During this time I have kept the family home in England and for the last 3 years rented it out. Prior to moving to Germany we had lived in the house for 9 years. I am considering selling it now while I am still in Germany. We plan to move back to the UK in the future but would likely buy a house elsewhere, so selling now would make things less complex when it comes time to move back. Does anyone know if I would be liable for capital gains tax if I sold now?

I would get professional guidance before I pushed any buttons but I would be curious to know if any other PHer's had experience of this?

[Eric Mc]

Depends on whether you are a UK tax resident in the year you dispose of the property.

Tax residency is quite complicated and don't assume you know what it means. It's not as obvious as you might think.

[pacoryan]

Eric Mc said:

Depends on whether you are a UK tax resident in the year you dispose of the property.

Tax residency is quite complicated and don't assume you know what it means. It's not as obvious as you might think.

This.

And beware the UK Govt is considering charging CGT on the disposal of UK property by non-residents.

What is the CGT regime in Germany?

[Thud_Mcguffin]

As I understand it in Germany property is exempt from CGT if it has been owned for over 10 years. Less than that and it is about 28%. Property prices move very slowly here, so much so that I have friends who complain that it takes 10 years of house price appreciation before they break even taking into account the purchasing fees.

I think you both confirmed what I suspected, that this is not uncomplicated. Treading very very carefully seems to be the way forwards

[pacoryan]

From what you say (IANAA!!) you could be considered CGT free if you sell and are tax-resident in Germany at the time of disposal.

Result!! I await an accountant to come along and burst my/your balloon!

[Eric Mc]

The trick is ensuring that you weren't a UK Tax Resident for the relevant year. Not always easy to prove.

[sumo69]

The residence rules are lengthy but at least are now defined in the law.

I have a client who now lives in NZ about to sell his previous home and now rented property.

Not to be done without going through the various tests, but reasonably straightforward for us tax accountants!

David

[Countdown]

Thud_Mcguffin said:

Bit of a long shot asking this one....

I have been living in rented accommodation in Germany for the last 4 years due to work. During this time I have kept the family home in England and for the last 3 years rented it out. Prior to moving to Germany we had lived in the house for 9 years. I am considering selling it now while I am still in Germany. We plan to move back to the UK in the future but would likely buy a house elsewhere, so selling now would make things less complex when it comes time to move back. Does anyone know if I would be liable for capital gains tax if I sold now?

I would get professional guidance before I pushed any buttons but I would be curious to know if any other PHer's had experience of this?

Based on what you've said I'm pretty sure you're exempt from CGT;

It was/is your only residence in the UK
you're not living there for work reasons
The last 3 years of ownership are exempt (as long as it has been your main residence at some point).

http://www.hmrc.gov.uk/cgt/property/sell-own-home....

[Alpinestars]

Countdown said:

Based on what you've said I'm pretty sure you're exempt from CGT;

It was/is your only residence in the UK
you're not living there for work reasons
The last 3 years of ownership are exempt (as long as it has been your main residence at some point).

Doesn't need to be for work reasons. As long as it's been the main residence at some point, the last 36 months are exempt, reduced to 18 months if the disposal is after 5 April 2014.

[LC23]

On top of the PPR rules there are also the general CGT rules for non residents. Provided you are non tax resident in the UK for 5 complete tax years and sell the property in that period of non residence (and after the 5 April following your date of departure) then no gain can accrue in the UK, even if you subsequently return to the UK.