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Guest Winners and Losers

Btl & Cgt

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Guest Winners and Losers

I wonder if anyone can tell me if a BTL with a couple of properties in the UK (who regularly buys and sells) would be liable to CGT if the properties were bought in other peoples names who were not resident in the UK? Even if the BTL'er is in the UK and lives off the rental and uses the capital gain to purchase additional UK property?

Serious question btw.

PS - Can WAL stay if she promises not to post anymore 'piffle'. :(

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Guest Winners and Losers

Are you thinking of buying in your relatives names or something?

I could probably answer your questions, but they aren't presented that clearly in your post above.

How did I know it would be our resident tax evader! ;)

No, not me, but come to think of it?? Um, OK, someone buys 4 properties in the UK in their relatives names. Relatives live in France, for example. They sell 2 properties and buy another more expensive property. All properties are rented out and the person who is resident in the UK derives their income from the rental and lives in one of the properties. Is that as clear as mud??

If I there was an emoticon for blowing kisses I would send you one! :unsure::P

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How did I know it would be our resident tax evader! ;)

No, not me, but come to think of it?? Um, OK, someone buys 4 properties in the UK in their relatives names. Relatives live in France, for example. They sell 2 properties and buy another more expensive property. All properties are rented out and the person who is resident in the UK derives their income from the rental and lives in one of the properties. Is that as clear as mud??

If I there was an emoticon for blowing kisses I would send you one! :unsure::P

The relatives in France would be a tad upset about having to deal with the UK IR, do UK tax returns as foreign residents & to collect rent for th supposed owner, then to show the foreign income on their own tax returns, have bank accounts in the Uk to support the rent receipts & expenses etc etc.

In short, completely unworkable.

If you are saying 1 person collects the rent on properties not in their name. Nor would the loans be in their names & they'd then have no tax reduction for the interest.

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The relatives in France would be a tad upset about having to deal with the UK IR, do UK tax returns as foreign residents & to collect rent for th supposed owner, then to show the foreign income on their own tax returns, have bank accounts in the Uk to support the rent receipts & expenses etc etc.

In short, completely unworkable.

If you are saying 1 person collects the rent on properties not in their name. Nor would the loans be in their names & they'd then have no tax reduction for the interest.

I never thought I'd say it, but TTRTR you are a star. Don't ever leave us! Unless the property market crashes, then I will understand completely. ;):D

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Whoever collects the rents and pays to a foreign-resident owner has an obligation to withhold UK tax 22% under the overseas landlord scheme: only if the foreign owner registers with HM Revenue & Customs, (and files UK tax returns) can the rents be paid gross, and relief obtained for loans. Therefore if this person is collecting the rents and 'paying to the owners', they will probably have a bigger tax liability than if they declared the money properly...

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I wonder if anyone can tell me if a BTL with a couple of properties in the UK (who regularly buys and sells) would be liable to CGT if the properties were bought in other peoples names who were not resident in the UK? Even if the BTL'er is in the UK and lives off the rental and uses the capital gain to purchase additional UK property?

Serious question btw.

PS - Can WAL stay if she promises not to post anymore 'piffle'. :(

CGT exemption for non-residents (NR) only starts after you have been NR for over 5 years.

Therefore if you decide to move overseas, and sell up your 2nd property within the first 5 years after your move CGT will apply.

However, as I understand it, once you have been NR for 5 years you can buy and sell in the UK as often as you wish without CGT. Would be grateful if anybody can confirm that my understanding is correct.

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Guest Winners and Losers

CGT exemption for non-residents (NR) only starts after you have been NR for over 5 years.

Therefore if you decide to move overseas, and sell up your 2nd property within the first 5 years after your move CGT will apply.

However, as I understand it, once you have been NR for 5 years you can buy and sell in the UK as often as you wish without CGT. Would be grateful if anybody can confirm that my understanding is correct.

I think it depends on what country you are resident in and the tax that they will charge you on any income derived from overseas. For example, I own a house in Australia at the moment. If I bought another house in the UK and sold it after the 5 years I would still have to pay capital gains tax on the profit when I brought that money into Australia - unless I have no other MAIN RESIDENCE. In this case, my house in Australia would be my main residence, so I would have to pay CGT. I did ask the Australian Tax Office how they would know and they said that they have very good links with the Inland Revenue. Basically it all comes down to where your main residence is.

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I think it depends on what country you are resident in and the tax that they will charge you on any income derived from overseas. For example, I own a house in Australia at the moment. If I bought another house in the UK and sold it after the 5 years I would still have to pay capital gains tax on the profit when I brought that money into Australia - unless I have no other MAIN RESIDENCE. In this case, my house in Australia would be my main residence, so I would have to pay CGT. I did ask the Australian Tax Office how they would know and they said that they have very good links with the Inland Revenue. Basically it all comes down to where your main residence is.

Thanks for that. I hadn't considered it from the angle of liability in your chosen country of residence after the UK. Sounds a bit harsh that the Oz government can tax you with CGT on profits from an asset outside the country? But that said I suppose its consistent with most countries income tax laws which generally tax on world-wide income.

I have been NR for over 8 years and do not have that problem in Dubai, but say I move to Australia I assume they can't tax me on the cash I take there with me?

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Thanks for that. I hadn't considered it from the angle of liability in your chosen country of residence after the UK. Sounds a bit harsh that the Oz government can tax you with CGT on profits from an asset outside the country? But that said I suppose its consistent with most countries income tax laws which generally tax on world-wide income.

I have been NR for over 8 years and do not have that problem in Dubai, but say I move to Australia I assume they can't tax me on the cash I take there with me?

No, they won't tax you on the 'cash'. I sold in UK and was not taxed on the money I took to Oz. Incidentally, the same thing would happen in reverse. If I bought property in the UK and then sold my Oz property I would have to pay CGT (I think). It does get very complicated. Basically in Oz, I can rent my house out for 6 years and sell it within that time without paying CGT (now, it is either unless or regardless of whether I have another main residence - will check). If I sell after the 6 years I will have to pay CGT whatever my situation is, unless I go back and live in the property for 12mths. After 12mths I can sell it (if I've been living in it) and pay no CGT - but I am quite sure this only applies if I don't have another residence - including in the UK. Maybe TTRTR can shed some more light. It is a minefield!

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W&L it depends - you'd need to seek advice - you will probably have some years of tax exemptions available to you if it was at some stage your main residence while in Oz. You will also have to include exchange gains/losses in the calculation of the gain - you translate price at which you bought at the FX rate prevailing when you bought, then the proceeds using prevailing FX rate when you sold, to calculate the gain, rather than just translating the gain.

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W&L it depends - you'd need to seek advice - you will probably have some years of tax exemptions available to you if it was at some stage your main residence while in Oz. You will also have to include exchange gains/losses in the calculation of the gain - you translate price at which you bought at the FX rate prevailing when you bought, then the proceeds using prevailing FX rate when you sold, to calculate the gain, rather than just translating the gain.

Yeah, my CGT exemption is 6 years - so long as I lived in it as my main residence in the previous 12 months prior to letting it out. I can go and live in it again for 12 months and get another 6 years expemption.

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CGT exemption for non-residents (NR) only starts after you have been NR for over 5 years.

Therefore if you decide to move overseas, and sell up your 2nd property within the first 5 years after your move CGT will apply.

However, as I understand it, once you have been NR for 5 years you can buy and sell in the UK as often as you wish without CGT. Would be grateful if anybody can confirm that my understanding is correct.

A UK citizen can sell a property CGT free the day after they leave the UK. However if they return to the UK within 5 years, the gain would be considered to have occured in the year of return & would be taxable. If the person returns to the UK after 5 full tax years, they would have escaped the tax altogether.

The problem is first convincing the IR that the UK citizen has left the country intending to be away for at least 3 years. When the IR is happy that a person intends to be away for at least 3 years, they'll happily allow them to become non-resident. They shouldn't sell their asset until the IR has aknowledged their non-resident status. But the gain may be taxable in the new country, so that's something else to watch out for.

UK citizens can show their intent to leave for at least 3 years by taking up full time employment in the destination country. If no employment is taken up, they can show their intention by buying a home in the destination country. The IR will also conside whether ther person's family moves with them or stays in the UK. They'll also consider a person 'ordinarily UK resident' if they visit the UK for 90 days or more each tax year. If they're considered ordinarily UK resident, their non-resident status will be denied or even revoked if it was previously agreed.

Foreign citizens have less trouble getting the IR to agree to their non-resident status because they are obviously not from the UK in the first place. But foreign citizens will still pay CGT on their UK assets sold while away if they return within 5 years. Not indluding their main home of course.

Edited by Time to raise the rents.

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I have a similar question.

If a person (not me) has a place here (primary residence) and a place in France or Spain and sell it for a profit.

1. How will the UK Inland Revenue find out?

2. Assuming they will (of course) what CGTaxes are there in France and Spain and would they have to pay them locally or pay UK CGT? Is there a trade off?

I would like to know if possible. A friend in trouble if you will :blink:

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Yeah, my CGT exemption is 6 years - so long as I lived in it as my main residence in the previous 12 months prior to letting it out. I can go and live in it again for 12 months and get another 6 years expemption.

As far as I understand the rules, you should nominate your place in Australia as your main residence by filing an IR form. You'll have to check the form number. That would make it exempt for CGT on the UK indefinitely, at least until you bought another place.

Also, there are special rules for foreigners that allow you to make endless amounts of money offshore & pay no tax on it ever in the UK as long as you don't repatriate the funds to the UK.

Apparently Britains richest man is a Swede who pays very little tax because the bulk of his wealth hasn't been taken into the UK.

http://www.guardian.co.uk/uk_news/story/0,...,682157,00.html

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Guest Winners and Losers

As far as I understand the rules, you should nominate your place in Australia as your main residence by filing an IR form. You'll have to check the form number. That would make it exempt for CGT on the UK indefinitely, at least until you bought another place.

Also, there are special rules for foreigners that allow you to make endless amounts of money offshore & pay no tax on it ever in the UK as long as you don't repatriate the funds to the UK.

Apparently Britains richest man is a Swede who pays very little tax because the bulk of his wealth hasn't been taken into the UK.

http://www.guardian.co.uk/uk_news/story/0,...,682157,00.html

Very interesting. Very complicated. Must get my head around it. :blink: Btw, I always imagined you to be younger. ;)

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A UK citizen can sell a property CGT free the day after they leave the UK. However if they return to the UK within 5 years, the gain would be considered to have occured in the year of return & would be taxable. If the person returns to the UK after 5 full tax years, they would have escaped the tax altogether.

The problem is first convincing the IR that the UK citizen has left the country intending to be away for at least 3 years. When the IR is happy that a person intends to be away for at least 3 years, they'll happily allow them to become non-resident. They shouldn't sell their asset until the IR has aknowledged their non-resident status. But the gain may be taxable in the new country, so that's something else to watch out for.

UK citizens can show their intent to leave for at least 3 years by taking up full time employment in the destination country. If no employment is taken up, they can show their intention by buying a home in the destination country. The IR will also conside whether ther person's family moves with them or stays in the UK. They'll also consider a person 'ordinarily UK resident' if they visit the UK for 90 days or more each tax year. If they're considered ordinarily UK resident, their non-resident status will be denied or even revoked if it was previously agreed.

Foreign citizens have less trouble getting the IR to agree to their non-resident status because they are obviously not from the UK in the first place. But foreign citizens will still pay CGT on their UK assets sold while away if they return within 5 years. Not indluding their main home of course.

Although you may be exempt from UK CGT, it is very likely that you would pay CGT in the country of residence. You need to check the rules in that country and the relevant tax treaty. There was a loophole with people moving to Belgium 'I think' where you could avoid CGT altogether.

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I have a similar question.

If a person (not me) has a place here (primary residence) and a place in France or Spain and sell it for a profit.

1. How will the UK Inland Revenue find out?

2. Assuming they will (of course) what CGTaxes are there in France and Spain and would they have to pay them locally or pay UK CGT? Is there a trade off?

I would like to know if possible. A friend in trouble if you will :blink:

The person risks a lot by not telling the IR that they've made a gain. If they bank a windfall & start earning interest, the IR might notice that on their next tax return & ask where it came from.

Anyway, if the property is in Spain, they will probably pay little or no CGT in the UK, because Spain taxes non-residents at 35% CGT. The UK wants up to 40%, so not much will be left over when Spain takes its share.

French CGT is 26%. I don't know if there are any special rules for non-residents.

Any tax paid in either country can be taken into account in the UK to prevent double taxation.

Although you may be exempt from UK CGT, it is very likely that you would pay CGT in the country of residence. You need to check the rules in that country and the relevant tax treaty. There was a loophole with people moving to Belgium 'I think' where you could avoid CGT altogether.

Belgiums CGT rate is 0%. There used to be a way to become 'temporarily non-resident' allowing a person to live in Belgium or any other 0% CGT country for just 1 tax year and return to the UK having evaded the tax. That was why they introduced the 5 year rule, because 1 year was too easy.

Very interesting. Very complicated. Must get my head around it. :blink:

You can do it if you B & Q it!

http://www.hmrc.gov.uk/helpsheets/ir283.pdf

Btw, I always imagined you to be younger. ;)

Am I being too serious for you tonight?

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Guest Winners and Losers

You can do it if you B & Q it!

http://www.hmrc.gov.uk/helpsheets/ir283.pdf

Am I being too serious for you tonight?

I already spent 1 hour looking on hmrc and saw that 'fact sheet'. I'm a slow learner OK. You should know by now that my IQ is only 118.

Never, I hang off every word. :rolleyes:

I thought the article was all about you, Britains richest man? ;)

Let's not make Shaker jealous. :unsure:

Edited by Winners and Losers

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Thanks TTRTR.

So if they sell in France then bring the money home then they pay 26% there and then pay the difference of 14% when they bring it here right? Sorry this is not my area at all.

So they end up paying 40% whatever they do. (Apart from their 8k allowance)

You talk about a tax return, but say they are PAYE (pay as you earn) this is more difficult to trace right.

(I WILL REPEAT THIS IS NOT ME AS YOU KNOW I AM WITHOUT PROPERTY ANYWHERE IN THE WORLD!)

I do appreciate this......

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Guest Winners and Losers

(I WILL REPEAT THIS IS NOT ME AS YOU KNOW I AM WITHOUT PROPERTY ANYWHERE IN THE WORLD!)

It's you, isn't it Gavin? ;):lol:

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It's you, isn't it Gavin? ;):lol:

It's a fair cop gov.

My alter ego has been buying property on the internet whilst I was asleep.

Luckily I have made sheds loads of cash and now have to worry about CGT.

No, in truth, I would love to be in a position to HAVE to pay CGT, I remember that I was all worried about the CGT I would have to pay back in 1999 during the dot com era, just before my portfolio lost around 90% of its value!

Thats probably why I am so sceptical of HPI.

I was wisely told, don't ever worry about paying CGT, its like Jose Morinho's selection problem, a nice one to have.

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It's a fair cop gov.

My alter ego has been buying property on the internet whilst I was asleep.

Luckily I have made sheds loads of cash and now have to worry about CGT.

No, in truth, I would love to be in a position to HAVE to pay CGT, I remember that I was all worried about the CGT I would have to pay back in 1999 during the dot com era, just before my portfolio lost around 90% of its value!

Thats probably why I am so sceptical of HPI.

I was wisely told, don't ever worry about paying CGT, its like Jose Morinho's selection problem, a nice one to have.

Yeah, but it's you, isn't it Gav? :lol::lol:

Ignore me tonight - Shakerbaby has rattled my cage. :unsure:

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Thanks TTRTR.

So if they sell in France then bring the money home then they pay 26% there and then pay the difference of 14% when they bring it here right? Sorry this is not my area at all.

So they end up paying 40% whatever they do. (Apart from their 8k allowance)

You talk about a tax return, but say they are PAYE (pay as you earn) this is more difficult to trace right.

(I WILL REPEAT THIS IS NOT ME AS YOU KNOW I AM WITHOUT PROPERTY ANYWHERE IN THE WORLD!)

I do appreciate this......

Remember, tax evasion is a crime. Even a PAYE earner's interest receipts are reported to the tax office by the bank. Personally I couldn't sleep soundly if I were doing anything illegal myself. ;)

They should expect to pay up to 40%, but I believe taper relief (on UK taxes) will apply even on foreign property. That's worth them finding out about. And yes the CGT allowance will mean they don't quite pay the full 40%.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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