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Are you domiciled in India or the UK please for tax purposes?
I am an Indian citizen married to a Briton and resident in the Uk
My apologies for the delay in reverting to you. I am looking at the double taxation treaty between India and the UK and I am finding difficulty finding evidence that there is a convention for CGT. I will ask a colleague to look at this who may have some further information as I do not want to give you the wrong information. Please do not reply to this thread in the meantime as it may prevent my colleague from replying.
I have been asked to respond to you - would you be happy for me to proceed?
Hi Sam ,
Yes please do .
Yes, could be a considered capital gain tax liability, but may I ask, was this first property ever your home ?
I also need to know
1) The date you purchased it and the purchase price (in sterling)
2) The dates that it was your main home
3) When you arrived in the UK
4) Are you taxed under the arising or remittance basis
5) How long you plan to remain in the UK
6) Was this property rented out - if so what dates and whether the rental income was brought into the UK, and if so has this been declared to HMRC each tax year
7) Will any of the proceeds of this sale, be brought into the UK
8) What price was the property sold for (in UK sterling)
9) Will you rent out the new property ? If so will the rents be brought into the UK
Then I can advise further
Dear XXXXX ,
1. Purchased May 2005 for £47,101 ( approx)
2. it was never my amin home ( had intended to live in India for 6
months a year but that did not happen )
3.I have lived in The UK since I married in 1974
4.Arising ( only income in UK my pension amounting to £4,800 pa)
5. Permanently apart from 2 to 3 months in India each year.
6.No it was not rented out.
7. Yes in dribs and drabs but I intend to invest most if not all but the original purchase price in another property in Delhi or perhaps in Goa.
8. £280,612 ( approx)
9. No it will solely be for the use of ourselves and family and friends when visiting India .
For your information the property was bought from proceeds of sale of my mother's house after her death . That sale involved payment of substantial CGT in India at a rate of 19% and HMRC have had all details of that and any other income from India which by its nature is received after tax has been deducted at source at a rate of 30% . Sadly over the past 3 years there has been very little to pay as most of my investments lost rather than gained which is why I have had to sell the apartment in Delhi.
Finally I have read the Double Taxation Treaty between UK and India and I note that at Clause 14 it states that each contracting state may tax capital gains in accordance with the provisions of its domestic law .
In view of my tax position here there would be no point in changing to the alternative taxation ( remittance as even were I to pay CGT on the full differential between £47K and 280K at 18% it would be considerably less than £50k plus any possible tax liability at around £42k less capital gains allowance ( £10,600 pa) for the year and the approx £5k available under Tax Free Allowance leaving liability at around £27K . So if I have to pay around this level of CGT in India would that clear things up ?.
However I was under the impression that in the UK as in India if proceeds are used to purchase another property then Capital Gain is not deemed to have been realised and would only apply on a final sale of property . I am assuming from what you
are saying that this is not the case .
The property ,by the way , was in my wife Radha's sole name and she owns no property in the UK
All questions were answered in relation to my wife . So correct me if i am wrong , with annual income of £4,800 , she would have potential CGT liability of around £70k ?.
That's great - I just needed to clarify this point, to ensure that I had provided accurate information.
I can provide a calculation - although please note this was not part of the original question, and Just Answer allow you ask one question (and clarification on that position) and additional work can either be posted as a new question (and you can always ask for me) or there is the facility to rate this answer and add a bonus.
Just wanted to say thanks .
No further action required .
You are very welcome