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Sam
Sam, Accountant
Category: UK Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi Julie, Like other people on the Q&A board, I have recently

Resolved Question:

Hi Julie,

Like other people on the Q&A board, I have recently inherited 2 properties abroad. I am European but have resided in the UK for 22 years and pay taxes here. I understand that CGT is inevitable from your previous answers.
How/ Where do I find out how much the other countries will tax me? (Luxembourg & USA)

Also, as I am only receiving a share of the sale, I assume that that's all that I can be taxed on, and not the total value of the property?

I also don't know what the % is for the CGT in the UK or how it works... Will I only be taxed on the share of my sale, or will my overall income be looked at as well?

I know the questions seem basic, but as this is all happening across 3 countries, I'm in a bit of a tailspin.

Looking forward to hearing from you,

Susan
Submitted: 10 months ago.
Category: UK Tax
Expert:  Sam replied 10 months ago.

Hi

 

JulieKingham no longer works on Just Answer, would you like me to help with your query?

 

I am an expert IN UK capital gains and can help with your all the UK aspects and how to treat the foreign tax this sale of property might be subjected to.

 

If you would like to proceed, then please advise whether you (along with the other beneficiaries) inherited the properties, or will inherit the proceeds from the sale of the properties (as there is a difference) as being sold under the terms of the will.

 

Thanks


Sam

 

 

 

 

 

 

Customer: replied 10 months ago.

Hi Sam,


 


if you believe that you can answer all of my above queries , then I can't see any reason why not.


 


Many Thanks

Expert:  Sam replied 10 months ago.

Hi

 

Then please clarify that

you (along with the other beneficiaries) inherited the properties, or will inherit the proceeds from the sale of the properties (as there is a difference) so the properties are being sold as instructed from the will, or have you all agreed to sell, having inherited a share each.

 

Thanks


Sam

Customer: replied 10 months ago.

We have agreed to sell, having inherited a share each.


 


We all reside in different countries, hence trying to gain clarity on how I will be affected in the UK.

Expert:  Sam replied 10 months ago.

Hi

 

Thanks for your question

 

And finally Can you advise the difference between the value of each property when inherited (your share of the value) and the value of each property expected to achieve at sale.


Thanks


Sam

Customer: replied 10 months ago.

Lux property value approx. 500.000 Euro - of which I would receive 1/6 share after local taxes & fees


 


 


US property value approx. 400.000 USD - of which I would receive 1/5 share after local taxes and fees


 


 

Expert:  Sam replied 10 months ago.

Hi

 

I need both values for each property so 1) the value at the time was inherited - AND 2) the sale prices

Thanks


Sam

Customer: replied 10 months ago.

Hi Sam,


 


we inherited both properties 3 weeks ago following my mother's passing- the value / sales price are approximated as noted as above.


 


 

Expert:  Sam replied 10 months ago.

Hi

 

Then as there is no gain (no profits being made between the value of the inherited price and the sale price) then you will not have a capital gain position to consider.


But, as I imagine, it may take a little time to sell - then all you have to consider is the profit made between these two dates.

 

If the total profit (on your share) is less than £10,600 then your have NO capital gains tax to worry about in the UK, and no need to declare this to HMRC.

 

But if the profits are more than £10,600 then make sure you also are advised on

1) Evidence of the costs to sell, such as legal fees and relator/estate agent fees

2) Evidence of any other associated costs towards the sale of these properties

3) Valuations of the property at your mothers death

4) Evidence of the sale price

 

As 1/6th of any costs to sell the property in Lux and 1/5th of the costs for the USA property can be deducted from your share of the gain.

 

Also if any taxes are suffered in Lux or USA, then you also need evidence of this too, because if there is a UK capital gain (profits of more than £10,600) then these taxes can be offset against UK tax arising (only equal to the UK amount due, the UK cannot refund another countries tax) as we have a double taxation agreement with the USA and Luxembourg (?)

 

But I would liaise with whoever is handling the sale for information about that countries tax position on property sales, or the family member who is co-ordinating each sale, to establish this information for you and whether through your non residency in each of those countries, and your intent to declare any gain arising to HMRC, as this is your country of residence,whether they have the ability to exempt you from any form of their countries taxation.

 

Do feel free to ask any follow up questions

 

 

 

Thanks


Sam

 

 

Customer: replied 10 months ago.


thanks.


 


I will likely have to pay CGT, so, as part of my original query above, what is the % of taxation I will have to pay for CGT, and will I only be taxed on the amount of the properties sale, or will these amount be added to my income and then will I need to pay a higher income tax?


 


 

Expert:  Sam replied 10 months ago.

Hi

 

Thanks for your question

 

The capital gains tax is separate from income tax, and is calculated within the following rates

 

The first £10,600 is exempt ( as already advised) as this is your annual exemption allowance.

Then you pay tax at a mix of 18% or 28% - and this is determined by how much basic rate band you have unused from your annual income.

If you annual income is in excess of £42,475 a year, then you have used all your basic rate band up, so the gain is fully chargeable at 28%

 

But, if you annual income is say £30,000 then you have £12,475 unused, so the first £12,475 of the gain (after the £10,600 exemption) would be at 18% and any remaining gain at 28%.

 

So as you can see its affected by the basic rate band position BUT has its own rates (which are preferable to income tax rates)

 

Thanks


Sam

 

 

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12769
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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