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taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
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Hi I am thinking of selling a property in France for 130,000

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Hi
I am thinking of selling a property in France for 130,000 euros. I will not be making a profit in France, in fact a loss once the allowable expenses have been taken off so will not have a GGT liability in France. The property prices in France are very low at the moment. However in the our limited company books the property was introduced at £85659 10 years ago when the exchange rate was 1.42 and after being depreciated is now in the books at £79600. The selling price equates to around £112000 at todays exchange rate of 1.15 so will I be liable to CGT in the UK? Thank you

Hello, if you have any questions or need further clarification after reading my answer please let me know.

 

Thank you for your question...

 

Please advise if the property is registered in the company's name and shown as a fixed asset.

 

Many thanks

Customer: replied 3 years ago.


It is registered in my name in France but was transferred into the company and is shown as a fixed asset on the balance sheet - current depreciated value £72806

Martin, thank you for your reply.

As it is a company asset, any gain from sale of it would attract capital gains tax at corporation tax rate of 20%.

If you have not claimed any capital allowance on this asset, depreciation is normally disallowed, the gain for tax purposes will be the difference between the cost/valuation price at the time of introduction and the eventual sale price.

The company would be able to claim credit for foreign tax suffered if any.

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Customer: replied 3 years ago.


Thanks. So for final clarity I would be liable for the difference between sale price converted into sterling at the prevailing rate and the book value of 72806. In round terms a gain of £39k or so and a tax liability of 20% on that?

Martin, thank you for your reply..

Your tax liability at CT rate of 20% will be on tax accounts gain and not financial accounts gain. You would take tax written down value as your cost base and selling price converted into Pounds Sterling at prevailing rate. As I mentioned earlier, depreciation would have been added back for tax accounts purposes and you would have capital allowance to replace the depreciation. Please ensure your written down values are the same.

I hope this is helpful and answers your question. I am available for any follow up questions you may have, and you can use the reply button to post your follow up questions to the page. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

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Hi Martin

I notice you have viewed my latest response to your original question on Capital gains tax on sale of company property (JACUSTOMER-cu07wi7e- Last Viewed on 7/18/2013 at 11:58 AM).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

Martin, thank you for accepting my answer.

Your bonus is greatly appreciated.

 

Good luck.

 

 

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