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Capital gains on selling


bubbles
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Presumably if you sold your main residence in the UK and moved to France to live in your second home for a period of time you would not be liable to Capital Gains in the UK.

However what would be the situation if you then sold your property in France , after a period of time , and decided to move back to the UK?

Maybe selling your "Main" property and moving into a "Second"  , albeit abroad , is not allowed.

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First of all I was relieved that no CGT was payable in France, then I checked out the CGT in UK.

It seems it is 18% of the gain.

Well, as we have had the house for 20 years, the value has understandable increased.

I know you can deduct costs of buying and selling and improvements (but of course you would have to have documents to substantiate that presumably).

Given that we paid the equivalent of £45k for the house back in 1989 , and it is probably worth around £280k now, that makes an awful lot of CGT at 18% of the gain.

Am I right in thinking that you only get one year of allowance (around £10,000 this year), or would we have an allowance for each of the intervening years too?

Bit confused here but it seems the CGT could be around £20,000 .
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This may be a tad harsh, but.... my OH and I started a business 10 years ago, sold our house to fund it. Worked our butts off for the first 8 years at least and built it up to employ 60 staff. Decided to sell and we too were liable to CGT. You bought a house, presumably enjoyed using it for a few years and can now cash in a nice £100k profit and you think you shouldn't be taxed on it ??

You won't be suprised to know I think you should cough up and enjoy the 82% profit.

..ps you may want to research indexation [;-)]

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Its an allowance against the gains made in a particular year so it's a one off . However assuming that the property it is in joint names you would have £10,000 each so that would save you £1800!

 

PS They abolished indexation a couple of years ago when they standardised the rate at 18%

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[quote user="bubbles"]First of all I was relieved that no CGT was payable in France, then I checked out the CGT in UK.

It seems it is 18% of the gain.

Well, as we have had the house for 20 years, the value has understandable increased.

I know you can deduct costs of buying and selling and improvements (but of course you would have to have documents to substantiate that presumably).

Given that we paid the equivalent of £45k for the house back in 1989 , and it is probably worth around £280k now, that makes an awful lot of CGT at 18% of the gain.

Am I right in thinking that you only get one year of allowance (around £10,000 this year), or would we have an allowance for each of the intervening years too?

Bit confused here but it seems the CGT could be around £20,000 .[/quote]

You only get one year's worth of allowance, but if two of you own it then you each get the allowance.

So assuming; the £45K includes the purchase and sale costs; there are no improvement costs; and the property is jointly-owned, then in rough terms you are liable to 18% of (((£280K-£45K)/2)-10K) each. This comes to just over £19K each, or around £38K in total. Remember to convert the € to £ at the rate that they were on the day that the cost was incurred/sale was completed.

Regards

Pickles

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[quote user="greyman"]This may be a tad harsh, but.... my OH and I started a business 10 years ago, sold our house to fund it. Worked our butts off for the first 8 years at least and built it up to employ 60 staff. Decided to sell and we too were liable to CGT. You bought a house, presumably enjoyed using it for a few years and can now cash in a nice £100k profit and you think you shouldn't be taxed on it ??

You won't be suprised to know I think you should cough up and enjoy the 82% profit.[/quote]I admire your philanthropy and sense of social responsibility greyman but if I too may be a tad harsh, you can shove your CGT where the sun don't shine !

From cradle to grave governments steal and squander enough of our money in other taxes, overt and covert, so they can keep their bl00dy hands off when I sell my house thank you very much [:'(]

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It would be nice to take that attitude with all tax but life ain't that simple. Given the choice between soaking hardworking people and rich second home owners who have clocked up 100k for just being in the right place at the right time I know where my preference lies. And I mean second homes, not main homes which are exempt.

Come the revolution, comrade perhaps this tax could be increased so a few workers on 10k p.a. could be exempted ! [Www]

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Hey, I think that statement is a bit harsh.

Remember, we bought that house 20 years ago.

It's hardly a case of making a quick buck.

It's just gone up in value like everything else.

At that time we bought a car for around £1,000 and the equivalent now would be around eight times that.

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It wasn't particularly aimed at you bubbles and wasn't a comment on a 'quick buck' just an easy buck. Plenty of people work in really menial jobs paying minumum wage but still pay tax. I don't begrudge you your profit but it doesn't seem unreasonable to have to pay tax on it. I happen to think those making a profit just from sitting on an asset for a few (or many) years should contribute a bit more than those who work 40 hours a week cleaning sick off hospital floors for instance.

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[quote user="greyman"]It wasn't particularly aimed at you bubbles and wasn't a comment on a 'quick buck' just an easy buck. Plenty of people work in really menial jobs paying minumum wage but still pay tax. I don't begrudge you your profit but it doesn't seem unreasonable to have to pay tax on it. I happen to think those making a profit just from sitting on an asset for a few (or many) years should contribute a bit more than those who work 40 hours a week cleaning sick off hospital floors for instance.

[/quote]

Hear Hear Greyman!

       On a related subject, I get rather annoyed by the (many) people who have lived here full-time "below the radar" for a number of years and now wish to sell up ,who on being told of the CGT situation , suddenly become very keen to make their first tax declaration, in order to avoid being treated as second home owners. I have personally had several asking me how to go about this when their houses are already on the market. I'm afraid I give them short shrift and direct them to the tax office.  

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It wasn't particularly aimed at you bubbles and wasn't a comment on a 'quick buck' just an easy buck. Plenty of people work in really menial jobs paying minumum wage but still pay tax. I don't begrudge you your profit but it doesn't seem unreasonable to have to pay tax on it. I happen to think those making a profit just from sitting on an asset for a few (or many) years should contribute a bit more than those who work 40 hours a week cleaning sick off hospital floors for instance.

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  • 1 year later...
Presumably if there is a mortgage or other loan against the property, this would also be deductible? just what is the situation if a mortgage is taken against the property, and then a few years down the line when it is sold, is the mortgage deductible?
Of course in the meantime the loan capital could have been spent on fast cars, wine, women/gigolo's, maybe some even squandered. . . [Www]
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sorry to barge in but seeking some advice also, will try to be brief.Jointly own property in U.K. with my partner(joint mortgage both names on deeds)bought property in France feb,2003 in my name only, fist couple of years travelled back & forth renovating, then in 2007 stayed in France & worked as registered artisan paying all cotisations insurances etc; filed 2 years french tax returns & claimed french address as principle residence.Late 2009 work dried up so de-registered retuned to U.K. for what should have been a short break, but due to health issues am still here.Health issues are now resolved & I am selling the French property & with the proceeds intend to return to france & build a new property which my partner & I will move into when complete.I briefly spoke to a notaire some 18mnths ago who seemed to think that no c.g. would be payable as in essance I was selling my principle residence to purchase another,but I'm not sure as to weather or not she understood that I am part owner of U.K. property.Any thoughts those in the know??

Many thanks,

chippiepat.
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[quote user="Chippiepat"]sorry to barge in but seeking some advice also, will try to be brief.Jointly own property in U.K. with my partner(joint mortgage both names on deeds)bought property in France feb,2003 in my name only, fist couple of years travelled back & forth renovating, then in 2007 stayed in France & worked as registered artisan paying all cotisations insurances etc; filed 2 years french tax returns & claimed french address as principle residence.Late 2009 work dried up so de-registered retuned to U.K. for what should have been a short break, but due to health issues am still here.Health issues are now resolved & I am selling the French property & with the proceeds intend to return to france & build a new property which my partner & I will move into when complete.I briefly spoke to a notaire some 18mnths ago who seemed to think that no c.g. would be payable as in essance I was selling my principle residence to purchase another,but I'm not sure as to weather or not she understood that I am part owner of U.K. property.Any thoughts those in the know??

Many thanks,

chippiepat.[/quote]

Hi,

    If you sell the french property before becoming resident in France again, provided it has not been lived in or let in the meantime , it should be free of french CGT under the special concession for EU citizens. However, it may well be that UK CGT would be due on the gain. If , on the other hand you moved back into the french house and stayed long enough to establish residence (ie , in practice, submitting a french tax declaration from that address) then it would be free of CGT as your principal residence. You don't say if you intend to sell your part of the UK house, but this also would be tax -free , if it has been your principal residence within , I think, 3 years. You should confirm these points with HMRC and the notaire , as appropriate. Do not act on my unsupported advice. Take a copy of this post when discussing your options.

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There is another factor is there not ?

As I recall when we bought our house we had to declare it as a primary or secondary residence.

We declared it as primary but had we nominated secondary would residing or working in France necessarily or automatically override that ?

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There is no primary/secondary declaration to be made when purchasing a property. 

If you purchase the property and you live elsewhere, then the property is a secondary residence.

If you move into the property to live, then is becomes your principal residence.  Its status is crystallised when you complete your next income tax return - you enter the address on the return so that you qualify for the appropriate reliefs/allowances, eg for tax d'habitation/fonciere, eco improvements, capital gains tax.

Any other property that you may own remains a secondary residence.

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I think also if you live in it as a primary residence for 3 years it bcomes CGT free.

I'm another vote that there shouldn't be any CGT if you've owned it for 20 years. That's a long commitment. Didn't I read that this year they are also going to tax 2nd homes in France so you'll end up with a yearly tax and CGT when you sell if you stay a UK resident.

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